CONSORCIO FINANCIERO S.A. · Consumer and mortgage loans, commercial loans, real estate financing, factoring and leasing services, as well as currency trading, derivatives and funds

2016 ANNUAL REPORTCONSORCIO FINANCIERO S.A.

committed to our customers

YOUR LIFE IS WHAT MOVES US

CONSORCIO SEGUROS VIDA

We aim to insure people against risks, providing the best protection available to our customers and their families, offering a variety of top quality financial services to meet

customer needs in terms of family prosperity and asset security in a reliable, approachable, modern institution that offers peace of mind.

CONSORCIO SEGUROS GENERALES

We provide a variety of insurance options to protect personal and corporate property, with a quality service that meets customer needs in terms of asset security, providing peace of mind and reliability, through our own distribution channels, as well as wholesale brokers,

banks, retail and web platforms.

CN LIFE SEGUROS VIDA

Annuities is our main line of business, where we provide our customers with professional and tailored assistance with the

financial stability and backing of the Consorcio group. We also participate in the disability and survivors' insurance (SIS) put

out to tender by the private pension system.

CONSORCIO CORREDORES DE BOLSA

As a subsidy of Banco Consorcio, we broker investment alternatives for our customers, so they can conduct safe, swift and simple transactions online.

LVCC ASSET MANAGEMENT

Consorcio Financiero is a 25% shareholder in LVCC Asset Manage-ment S.A., who is 99.9% shareholder of LarrainVial Asset Management Administradora General de Fondos S.A., which offers a wide array of products to its customers.

BANCO CONSORCIO

We offer top quality financial services to meet our customers’ financing and investment needs in three business areas: personal banking, corporate banking and finance.

SEGUROS LA POSITIVA VIDA (PERU)

Consorcio Financiero S.A., through its subsidiary CF Inversiones Perú S.A.C. owns 40.1% of La Positiva Vida Seguros y Reaseguros S.A., the fourth largest life insurance provider in Peru, offering life insurance, workplace accident insurance, pension insurance and retirement insurance. It offers tailored professional assistance to its customers, ensuring that they are protected at all times.

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Products:Annuities, individual life insurance, voluntary retirement savings, group and catastrophic insurance, life insurance

with savings, credit insurance, travel insurance and disability insurance products

US$ 7,913Million

In Assets

US$ 748Million

In Equity

US$ 1,017Million

In Assets

US$ 119Million

In Equity

Products:Consumer and mortgage loans, commercial loans, real estate

financing, factoring and leasing services, as well as currency trading, derivatives and funds capture for large companies and individuals

US$ 4,837Million

In Assets

US$ 577Million

In Equity

Products:Auto insurance, home insurance, obligatory personal accident insurance for accidents

involving domestic and foreign motor vehicles (SOAP - SOAPEX), corporate insurance, fire insurance, third-party liability insurance, engineering insurance and warranties

US$ 138Million

In Assets

US$ 32Million

In Equity

US$ 454Million

In Assets

US$ 70Million

In Equity

Productos:Brokering of securities, equity, bonds, term deposits and

mutual funds

Products:Annuities and disability and survivors' insurance (SIS)

US$ 1,082Million

In Assets

US$ 110Million

In Equity

Products from Larraín Vial AGF Asset Management:Mutual funds and investment funds

US$ 3,885 Million

Assets Managed by Larrain Vial AGF Asset Management

SUBSIDIARIES OF CONSORCIO FINANCIERO S.A.


We aim to insure people against risks, providing the best protection available to our customers and their families, offering a variety of top quality financial services to meet

customer needs in terms of family prosperity and asset security in a reliable, approachable, modern institution that offers peace of mind.


We provide a variety of insurance options to protect personal and corporate property, with a quality service that meets customer needs in terms of asset security, providing peace of mind and reliability, through our own distribution channels, as well as wholesale brokers,

banks, retail and web platforms.

CN LIFE SEGUROS VIDA

Annuities is our main line of business, where we provide our customers with professional and tailored assistance with the

financial stability and backing of the Consorcio group. We also participate in the disability and survivors' insurance (SIS) put

out to tender by the private pension system.

CONSORCIO CORREDORES DE BOLSA

As a subsidy of Banco Consorcio, we broker investment alternatives for our customers, so they can conduct safe, swift and simple transactions online.

LVCC ASSET MANAGEMENT

Consorcio Financiero is a 25% shareholder in LVCC Asset Manage-ment S.A., who is 99.9% shareholder of LarrainVial Asset Management Administradora General de Fondos S.A., which offers a wide array of products to its customers.

BANCO CONSORCIO

We offer top quality financial services to meet our customers’ financing and investment needs in three business areas: personal banking, corporate banking and finance.

SEGUROS LA POSITIVA VIDA (PERU)

Consorcio Financiero S.A., through its subsidiary CF Inversiones Perú S.A.C. owns 40.1% of La Positiva Vida Seguros y Reaseguros S.A., the fourth largest life insurance provider in Peru, offering life insurance, workplace accident insurance, pension insurance and retirement insurance. It offers tailored professional assistance to its customers, ensuring that they are protected at all times.

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AN

CE P E N S I O N B A N K I N G S A

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SA

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BA N K I N GI N S U R A N

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Products:Annuities, individual life insurance, voluntary retirement savings, group and catastrophic insurance, life insurance

with savings, credit insurance, travel insurance and disability insurance products

US$ 7,913Million

In Assets

US$ 748Million

In Equity

US$ 1,017Million

In Assets

US$ 119Million

In Equity

Products:Consumer and mortgage loans, commercial loans, real estate

financing, factoring and leasing services, as well as currency trading, derivatives and funds capture for large companies and individuals

US$ 4,837Million

In Assets

US$ 577Million

In Equity

Products:Auto insurance, home insurance, obligatory personal accident insurance for accidents

involving domestic and foreign motor vehicles (SOAP - SOAPEX), corporate insurance, fire insurance, third-party liability insurance, engineering insurance and warranties

US$ 138Million

In Assets

US$ 32Million

In Equity

US$ 454Million

In Assets

US$ 70Million

In Equity

Productos:Brokering of securities, equity, bonds, term deposits and

mutual funds

Products:Annuities and disability and survivors' insurance (SIS)

US$ 1,082Million

In Assets

US$ 110Million

In Equity

Products from Larraín Vial AGF Asset Management:Mutual funds and investment funds

US$ 3,885 Million

Assets Managed by Larrain Vial AGF Asset Management

TABLE OF CONTENTS

p. 06

p. 32

p. 48

p. 62

Chap. 01

Chap. 02

Chap. 03

Chap. 04

CONSORCIO FINANCIERO

CORPORATE MANAGEMENT

COMPANYINFORMATION

FINANCING, INVESTMENT AND RISK POLICY

p. 70

p. 76

p. 130

Chap. 05

Chap. 06

Chap. 07

ECONOMIC AND FINANCIALCONTEXT

BUSINESS MANAGEMENT

FINANCIAL STATEMENTS


06

100 YEARS OF GROWTHAND PRESTIGE

looking out for and protecting the dreams of all Chileans and their families, in every

corner of the country


01CONSORCIOFINANCIERO

INSURANCECOMPANIES

$1,228,080

85%

14%1%

$1,437,772MILLIONS TOTAL

REVENUE

DISTRIBUTION OF REVENUESCONSORCIO FINANCIERO(IN MILLIONS OF PESOS)

85%

PARENT COMPANYAND OTHERS

BANK ANDSUBSIDIARIES

$207,602

$2,090

14%

1%

CONSORCIO FINANCIERO S.A. IN NUMBERS

2,802EMPLOYEES

$9,942MILLION

NET INCOMECN LIFE

SEGUROS VIDA

$3,344MILLION

NET INCOMESEGUROS GENERALES

$85,218MILLION

NET INCOME CONSORCIO

SEGUROS VIDA

$47,716MILLION

NET INCOMEBANCO CONSORCIO

US$1,321MILLION

CONSORCIO INSURANCE

PREMIUM

08

FECU (Chilean standardized coded statistics) for Consolidated Consorcio Financiero with values per area of operational income

2013CH$M

2014CH$M

2015CH$M

2016CH$M

EQUITY 644,938 694,792 714,702 910,664

MANAGED ASSETS 6,172,056 7,579,573 8,422,238 9,520,442

TOTAL REVENUES 845,564 1,071,137 1,187,575 1,437,772

FINAL PROFITS 46,440 114,491 88,189 137,161

EVOLUTION OF CONSORCIO FINANCIERO

RISK RATING 2016

FELLER RATE CLASIFICADORA DE RIESGO LTDA: AA

FISTCH CHILE CLASIFICADORA DE RIESGO LTDA: AA-

65.4%WOMEN

34.6%MEN

2012 43,425

52,924

59,502

64,931

74,014

2013

2014

2015

2016

EVOLUTION OF PREMIUMSGENERAL INSURANCE

(IN CH$M)

BANK LOANS AND BANKING RISK INDEX

(IN CH$M)

DEC/11 DEC/12 DEC/13 DEC/14 DEC/15 DEC/16

350,000 1%

0 0%

1,050,000

700,000

1,400,000

1,750,000

3%

2%

4%

5%

6%2,100,000

LOANS

RISK INDEX

2012 386,823

488,864

520,943

699,635

810,340

2013

2014

2015

2016

EVOLUTION OF LIFE INSURANCE PREMIUMS(CONSORCIO VIDA + CN LIFE)

(IN CH$M)

2012

2013

2014

2015

2016

2012

2013

2014

2015

2016

197,316

792,603

211,152

844,863

230,966

895,905

252,627

950,368

280,344

1,023,495

QUANTITY

AMOUNT IN CH$M

ANNUAL EVOLUTION OF PENSIONS PAID(CONSORCIO VIDA + CN LIFE)

09

NUMBERS AS OF DECEMBER 2016

DEAR SHAREHOLDERS,

In representation of the Board of Directors of Consorcio Financiero S.A., I am very pleased to present the Consorcio Financiero S.A. Annual Report for the 2016 fiscal year. This period was historical and very positive for our company on many levels.

Despite Chile’s weak economic growth last year, amounting to only 1.6%, and a drop in investment for the third consecutive year, influenced by both external and internal aspects, including regulatory changes in various sectors -labor, tax, education, social security- and a recent environment marked by a lack of confidence, Consorcio made important strides in the consolidation and development of the different businesses in which it participates: insurance, pension, savings and banking.

Specifically, in 2016 we had the privilege of joining our shareholders, customers, insurance brokers, suppliers and employees to celebrate Consorcio’s 100-year anniversary. Few companies in Chile have the opportunity to commemorate their 100-year anniversary, especially in an area as dynamic and competitive as the financial industry. Consorcio has a history of leadership in the industry, and this year it has been shaped by new and significant achievements, allowing the Consorcio group to project itself into the future.

We have come a long way since March 17, 1916, when Compañía Nacional de Seguros La Industrial was founded, marking the start of what would later be known as Consorcio. We have managed to exceed the objectives we have set for ourselves, with more than favorable results, and we have also been a relevant player in the development of Chile.

It is with great pride that today we can say that we are the most important insurance group in the country, through our three Insurance Companies -Consorcio Seguros Vida, Consorcio Seguros Generales and CN Life Seguros Vida- and an organization, including Banco Consorcio and its subsidiaries, that offers a variety of top quality financial services, to meet each customer’s needs in terms of family prosperity, asset security, financing, investment and payment methods.

As we celebrated our 100-year anniversary, one of the most relevant milestones last year was the incorporation of the International Finance Corporation (IFC), member of the World Bank Group for the private

LETTER FROM THE CHAIRMAN

10

01 CHAP

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MARCOS BÜCHI BUCChairman, Consorcio Financiero S.A.

sector, into the Consorcio Financiero family. After subscribing a capital increase of US$ 140 million, of which US$ 100 million came directly from the IFC and US$ 40 million was contributed by the Financial Institutions Growth Fund (FIG Fund), a Private Fund managed by the IFC Asset Management Company. IFC, the largest global development entity dedicated exclusively to the promotion of the private sector, subscribed 8.23% of the property of Consorcio Financiero S. A.

Through this agreement, we aim to boost the growth of Consorcio Financiero in the banking and life insurance markets in Chile and the region. This clearly strengthens our strategic position in both business development and corporate governance, among others.

With this, the Board of Consorcio Financiero grew from seven to nine members, two of whom are independent and one represents IFC. In parallel, as a company we have committed to promoting compliance with the social and environmental policies supported by this international institution.

The proceeds from the capital increase were used to subscribe and pay capital increases of US$ 70 million in Consorcio Seguros Vida and US$ 70 million in Banco Consorcio, to strengthen the development plans of both subsidiaries.

For Consorcio, the incorporation of a partner such as IFC is very significant. IFC brings ample knowledge of the regional financial markets, and its international character strengthens us with its global experience and knowledge.

Also in the business area, another milestone in 2016 was the acknowledgment awarded to Consorcio Seguros Vida by the prestigious English magazine World Finance. For the second time, we were distinguished in Chile with the Best Life Insurance Company Award. This distinction highlights the way in which we have addressed current industry challenges, such as the breakthrough of technology and the increase in customer demands.

Likewise, we are proud to have been certified “Top Employer Chile” for the third year in a row. This certification has been awarded since 1991 by the international organization, Top Employers Institute, after analyzing the most relevant practices and standards in the workplace

in over 1,100 companies around the world. This certification uses the highest standards of excellence in employment conditions (a standard measure of global best practices) to evaluate and certify companies around the world. This achievement forms part of Consorcio’s people-oriented strategy.

In reaffirmation of this people orientation, customer service is a central pillar of our business. As part of this commitment, Consorcio forms part of the Chilean Insurance Industry Self-Regulation Council, created in 2002 to oversee compliance with free competition and loyalty standards between companies and consumers. One of the most noteworthy initiatives is the figure of the Policyholder Advocate, whose purpose is to independently resolve potential conflicts or problems that may arise for policyholders in relation to insurance contracts or services rendered by one of the companies in the insurance market.

Important milestones this year and achievements obtained in each business area are summarized in the positive results obtained by Consorcio Financiero in 2016.

At year end, the holding’s consolidated profits totaled Ch$ 137,161 million (equivalent to US$ 205 million), with a significant increase over the Ch$ 88,189 million (equivalent to a US$ 132 million) obtained the previous year. The three insurance companies of Consorcio Financiero -Consorcio Seguros Vida, CN Life Seguros Vida and Consorcio Seguros Generales- contributed 70% of this final result. Banco Consorcio and its subsidiaries, together with the other subsidiaries of Consorcio Financiero, represented the other 30% of total profits.

At year end, Consorcio Financiero’s equity totaled Ch$ 910,664 million, (equivalent to US$ 1,360 million), while the volume of managed assets was Ch$ 9,520,442 million (equivalent to US$ 14,221 million), with a 13% increase over the previous year.

INSURANCE BUSINESS

The positive results obtained by Consorcio Seguros in 2016 through its three companies is primarily due to the good performance and diversification of the investment portfolio, added to a wide variety of products and distribution channels, with a strong brand image and high level of experience in customer service.

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Ch$910,664MILLONES

PATRIMONIOCONSORCIOFINANCIERO

2016

Ch$137,161MILLION

IN CONSOLIDATED PROFITS

2016

2016 ANNUAL REPORT CONSORCIO FINANCIERO

Last June, the new mortality tables went into effect for the technical reserves and pension calculations of the life insurance companies. These tables incorporate an increase in the life expectancy of women and men, of 14 and 7 months, respectively. The application of the new tables was immediate for all new sales and gradual for stock from results and equity in a six-year period.

In line with strengthening our corporate governance, our three insurance companies implemented the new NCG 408 standard, which includes compliance notes for each item involved in the key roles and functions of corporate governance. As part of its implementation, it held a self-assessment and the report was sent to the Chilean Securities and Insurance Supervisor (SVS) in September.

Once again, the high growth shown by our three insurance companies, Consorcio Seguros Vida, CN Life Seguros Vida and Consorcio Seguros Generales, is the result of our successful business strategy. Our results were overwhelmingly positive. We reached US$ 1,321 million in premiums, consolidating the Consorcio group as the biggest player in the insurance industry with these historical figures.

Consorcio Seguros Vida had an 11.8% market share last year, one percentage point above the market share from the previous year, with a direct premium of Ch$ 692,321 million (equivalent to US$ 1,034 million). Profits totaled Ch$ 85,218 million (equivalent to US$127 million), while assets reached Ch$ 5,297,390 million (equivalent to US$ 7,913 million) and equity rose to Ch$ 500,477 million (equivalent to US$ 748 million).

Annuities continued to be the main business line of Consorcio Seguros Vida, which was evidenced by its 33.4% growth in the last year, well above the 17.7% industry standard. The recognition and prestige of the organization, along with the appropriate diversification, an effective administration of its distribution channels, and expert assistance provided to customers, largely explains the company’s performance above the industry average. Revenue from premiums in this segment totaled Ch$ 469,060 million, corresponding to a 17% market share, once again ranking us as industry leader.

The quality of our service and customer preference is reflected in the incorporation of 7,416 new pensioners into Consorcio Seguros Vida in 2016.

In voluntary pension savings (Ahorro Previsional Voluntario, APV), Consorcio Seguros Vida kept its first place in the market, with an industry share of 23.1% and Ch$ 69,588 million in revenues. The managed balance in this segment was Ch$ 252,306 million, which represented an 11% increase over the 2015 volume.

The individual life business line maintained direct premium levels from the prior year. Collective insurance grew 12.6% over twelve months, reaching a 4.3% market share in this area.

CN Life Seguros Vida continued its strategy focused on sale of annuities and its participation in disability and survival insurance (SIS) tenders. Its direct premium was Ch$ 118,019 million, giving it a 2% market share. Its profits were Ch$ 9,942 million and equity Ch$ 73,847 million. Its total assets level was Ch$ 724,634 million.

Normal retirement represented 32.7% of the income generated by annuities, while premature retirement represented 18%, disability contributed 40.5%, and survival 8.7%.

CN Life Seguros Vida was awarded a fraction of Women in the disability and survival insurance (SIS) tender for the July 2016-July 2018 period, which insures AFP policyholders. Revenue from SIS was Ch$ 72,377 million, contributing 61.3% of total company revenue and situating it among the most active participants in the area, with a 13.3% market share.

In general insurance, Consorcio Seguros Generales’ effective strategy of multichannel administration, its improvement plan in claims management and optimization of prices and sales volumes in vehicle pricing, together accounted in large part for the significant growth in direct premium and profits. Premium growth in the company was 14%, well exceeding the average growth in the industry, which was 5.4%, excluding the insurance and credit companies, where Consorcio doesn’t participate.

Consorcio Seguros Generales had profits of Ch$ 3,344 million, and revenue from direct premiums was Ch$ 74,014 million, 14% higher than the previous year. Company assets were Ch$ 92,164 million and equity was Ch$ 21.626 million.

BANKING BUSINESS

In 2016, the banking industry showed a limited real growth in credit of 2.4%, representing the lowest annual growth in the past seven years. Part of this limited expansion is explained by the effect of the exchange rate appreciation on corporate loans. Excluding this effect, total credit


12

Ch$9,520,442MILLION

IN MANAGED ASSETS

US$1,321MILLION

IN CONSOLIDATED PREMIUMS

01 CHAP

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grew 3.2%, equivalent to two times the estimated real GDP growth for 2016, whereas the proportion of credit to GDP remains around 85%. This lower dynamism is associated with the modest economic growth and poor expectations, which has been reflected in a lower corporate and consumer credit demand and a more conservative credit offer from banks due to the greater concern for customer risk.

Banco Consorcio’s results last year confirm that our decision to enter the banking sector in 2009 was the right one. In fact, 2016 was an excellent period for our subsidiary, which closed the year with record profits and once again ranked as leader in system efficiency, with a 29.8% index through December 2016, compared to an industry-wide indicator of 50.4%.

Focused on four business lines, the significant increase in the commercial banking and stock brokerage results are the main cause behind the final profits, which reached Ch$ 47,716 million in 2016, 34.8% higher than the Ch$ 35,392 million in profits in 2015. Likewise, the final result last year was 18.1%, higher than the amount budgeted for the year and had an income composition in line with long-term goals.

At year end, the bank’s consolidated assets totaled Ch$ 3,238,462 million and customer loans totaled Ch$ 1,792,983 million, driven by a rise in commercial loans (13.7%) and in housing loans (13.3%) in the managed portfolio.

Corporate banking recorded a margin of Ch$ 31,205 million before fixed expenses and loans totaling Ch$ 1,670,529 million, representing an annual increase of 9.1% and 13.7%, respectively.

The finance business achieved a positive gross margin of Ch$ 25,593 million, sustained by active management of fixed-income investments in local and international markets, and efficient management of the bank’s term, currency and interest rate mismatches.

Consorcio Corredores de Bolsa S.A. had a fixed-income portfolio of Ch$ 215,683 million in 2015, which rose to Ch$ 265,471 million at

13

As we celebrated our 100-year anniversary, one of the most relevant milestones last year was the incorporation of the International Finance

Corporation (IFC), member of the World Bank Group for the private sector, into the Consorcio

Financiero family. After subscribing a capital increase of US$ 140 million, it acquired 8.23%

ownership of Consorcio Financiero S. A.

01 CHAP

.


14

the end of 2016, with 23% portfolio growth. This portfolio generated a gross margin of Ch$ 8,161 million in 2015, which rose to Ch$ 11,016 million in 2016, within a well-controlled inflation context.

And even though it was below our budgets, the retail segment reoriented its strategy, dividing into two segments: preferred and mass segments, as well as special agreements for pensioners of Consorcio Seguros Vida and CN Life Seguros Vida, with special credit products and means of payment. These come with ambitious development and growth plans. As part of the restructuring, three sales channels were closed down (payroll deduction, open loans, online brokers), because they did not add value due to the combination of the brokerage cost, credit sales rate and risk rate.

This will enable the bank to focus on a unique sales model for mass banking through directed sales, offering pre-approved loans for customers with good payment history, ostensibly reducing portfolio risk levels.

We inaugurated a new mass banking branch in Puente Alto, and in the preferential segment, we began the design of products and a service model, as well as the preparation of business teams to launch the new preferential banking segment in 2018. In this segment, we hope to reach approximately 40,000 current account customers in a five-year period and turn Banco Consorcio into the main bank for many of them, incorporating ourselves into the personal current account market.

We continue to work towards our goal of making Banco Consorcio a relevant and profitable player in a highly competitive industry that has generated interesting returns for us, thanks to our strategy, efficiency and synergy with the rest of the group’s business lines. The subscribed capital increase after IFC became a shareholder of Consorcio Financiero falls into this line of thinking.

REGULATORY CONTEXT

As part of the constant effort to be on the cutting edge of the financial sector, one of our work guidelines is to ensure that our ongoing improvements in corporate governance and development of best strategies in products, channels and services, are compatible with regulatory changes as they are implemented.

In the medium term, insurance companies that participate in the Chilean market should adapt to the new risk-based capital regulation currently being processed in Congress, which has already undergone four revisions. As an insurance group, through our participation in the technical discussion, our goal is to share our experience and know-how in the construction of a solid institutionality.

Congress also approved the creation of the Securities and Insurance Commission during this period. This new institutionality will go into effect in August 2018 with new standards on financial oversight and regulation, which opens the doors to important challenges for all companies in the finance sector.

Further to the aforementioned, one of the main regulatory issues currently under debate is the pension system reform. We have participated and contributed actively to this discussion through the Association of Insurers of Chile. And given its relevance and impact on the country, we have been watching closely and trust that the authorities will undertake the real change necessary through a national agreement that is technically aligned overall with the initiatives proposed and a long-term outlook.

Over the past few years, the Superintendent of Banks and Financial Institutions has continued to sustainably increase its regulatory demands on entities that operate in the country through the incorporation of international standards, management rating inspections and ongoing work with regulated institutions. In 2015, a new liquidity regulation was published, which refined the regulations in force to align them with international best practices. It aims to strengthen liquidity risk management policies in banking, increase the quality and quantity of information provided to the public and regulators, incorporate the Basel III quantitative measures and improve the current regulatory requirements on term mismatches. This legislation has been implemented gradually, and during 2016 the Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR) and Funding Concentration measurements were introduced. Also, new regulations governing provisions on mortgage loans came into effect in January 2016. Until that date, each bank had its own internal model for creating these provisions, and as of January 2016, the Superintendence of Banks established a model based on minimum provisions. This legislation meant that the risk index on the mortgage portfolio increased from 0.7% in December 2015 to 1.0% in January 2016.

ENVIRONMENT AND COMMUNITY

At Consorcio, we firmly believe that a key part of our mission is to create value for our shareholders through the construction of trust-based relationships in the multiple settings in which we participate, fulfilling our role as good corporate citizens and providing the conditions for people in our organization to develop their full potential in a challenging and respectful work environment.

For Consorcio, the incorporation of a partner such as IFC is very significant. IFC brings ample

knowledge of the regional financial markets, and its international character strengthens us with its

global experience and knowledge.

15

We also believe that we have a social commitment in our work, which leads us to establish a direct line of communication with the community. Because our success should also open the doors to new and better opportunities for others. This is the only way that we can move forward as a society and continue down the road to development as a country.

It is this vision that drove us to create Fundación Consorcio Vida, whose work mainly focuses on Monte Olivo School in Puente Alto, which was opened in 2002 to provide quality education to children in one of the most vulnerable areas of Santiago, giving them the necessary tools for a holistic development.

To date, 291 students have graduated from the school over 6 years and at year end, it had 1,030 students enrolled, from pre-kinder to 12th grade. We are pleased to report that several students have already completed professional internships with the company and some are currently working at Consorcio Seguros, after having completed their higher education. This fills us with pride, as we close a virtuous cycle of social commitment.

Our main interest is in working comprehensively with Monte Olivo School. For the third year in a row, we have had an alliance with Fundación Sonrisas, to develop plans for dental health prevention and care for students, teachers, parents and guardians. Our work in this area has made a significant positive contribution to emotional aspects such as self-esteem and functional aspects such as dental care and risk prevention.

Consorcio’s vision is that of an active company that interacts directly with its community every day. We acknowledge the role of our employees and distributors in our corporate results and this inspires us to generate deep, long-term relationships with our customers, focused on ensuring their tranquility and protection, guiding them with innovative and efficient financial solutions, favoring their prosperity, with an attitude of a close, proactive and timely service based on an awareness of their needs.

OUR CHALLENGES

Last year’s balance, which happened to coincide with our 100-year anniversary, confirms that Consorcio Financiero has consolidated as a leader in financial services, actively participating in a wide range of businesses grouped under the areas of insurance, pensions, savings and banking.

As part of a larger strategic decision, since 2015, we have expanded from our solid local position and begun to move into the international arena. The entry into the Peruvian market after the purchase of 40.1% of Compañía de Seguros La Positiva Vida, the fourth largest life insurance company in Peru, was a positive step in this direction.

And in 2016, the incorporation of IFC in the ownership of Consorcio Financiero has given us a new international perspective and strengthened our interest in building a quality corporate governance, offering our customer all of our experience and knowledge in the development and provision of the financial products they require.

The companies that remain in the long term are those that adapt to transformations without losing their essence, building their prestige and a recognition of their work through their daily activities and ensuring a permanent and active evolution in innovation and technology in the current digital era. Consorcio addresses this new digital challenge with a clear focus on its customers. This is what motivates our growth.

As we turn 100, we want to reaffirm our commitment towards the development of our company, our industry and our country. We hope that we can adequately project the leadership of Consorcio Financiero, now joined by IFC, which has given us a global perspective in each of our businesses.

We still face important challenges ahead. We must continue to strive to keep up to speed on regulatory changes, make permanent improvements in corporate governance and of course develop the best strategies in distribution channels, products and services, within the framework of a positive digital evolution, which enables us to offer a renewed value proposal for our customers and distributors.

Marcos Büchi BucChairman

Consorcio Financiero S.A.

CONSORCIO FINANCIERO01 CHAP

.

Chilean Tax ID 3.984.154-1BusinessmanOn board of directors since: 09/29/1999

Chilean Tax ID 5.718.666-6Civil EngineerUniversidad de ChilePostgraduate studies at Columbia UniversityOn board of directors since: 09/29/1999

JOSÉ ANTONIO GARCÉS SILVADirector

HERNÁN BÜCHI BUCDirector

BOARD OF DIRECTORSCONSORCIO FINANCIERO S.A.

Chilean Tax ID 5.715.251-6Civil EngineerUniversidad de ChileOn board of directors since: 09/29/1999

Chilean Tax ID 3.931.817-2Business Administration DegreePontificia Universidad Católica de ChileOn board of directors since: 09/29/1999

Chilean Tax ID 7.383.017-6Civil Structural Engineering Degree, Universidad de ChileOn board of directors since: 12/30/2014

JUAN HURTADO VICUÑADirector

EDUARDO FERNÁNDEZ LEÓNDirector

MARCOS BÜCHI BUCChairman

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Chilean Tax ID 6.375.828-0Industrial EngineerUniversidad de ChileOn board of directors since: 04/28/2011

0-E (Foreign)Business AdministratorMasters in AdministrationStanford UniversityOn board of directors since: 07/27/2016

Chilean Tax ID 5.543.624-KBusiness Administration DegreePontificia Universidad Católica de ChileOn board of directors since: 09/29/1999

PEDRO HURTADO VICUÑADirector

SERGIO RESTREPO ISAZADirector

JUAN JOSÉ MAC-AULIFFE GRANELLODirector

Chilean Tax ID 7.578.740-5Attorney Universidad de ChileOn board of directors since: 07/27/2016

Chilean Tax ID 8.661.203-8Business Administration DegreePontificia Universidad Católica de ChileMaster’s Degree in Business AdministrationHarvard UniversityIn role since: 10/27/1999

RAMIRO MENDOZA ZÚÑIGAIndependent Director

PATRICIO PARODI GILChief Executive OfficerConsorcio Financiero

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2016 ANNUAL REPORT CONSORCIO FINANCIEROCONSORCIO FINANCIERO01 CH

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100 YEARS OF HISTORY

1916Founding of Compañía de Seguros La Industrial.

1920The company has a successful startup in sales and expands its offices on Bandera street, which join Nueva York and Ahumada

streets in shaping Santiago’s financial district.

1928The first graphic representation of Compañía de Seguros La Industrial appears in the Official Newspaper on February 04, 1928.

1974The company changes its name to Compañía de Seguros de Vida La Industrial S.A.

1975 The company changes its name to Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A.

1986The company becomes part of Bankers Trust, which acquires

96.21% of its shares.

1987Consorcio creates Fundación Consorcio to support the country’s

development and social progress.

1991 Consorcio has a total of 22 offices in the most important cities throughout the country. Approximately 450 people work in these.

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1993Inauguration of the Consorcio corporate headquarters, designed by renowned Chilean architects Borja Huidobro and Enrique Browne.

1999Consorcio Financiero S.A. is created, a 100% national company in the hands of the Hurtado Vicuña, Fernández León and Garcés Silva fami-lies. Consorcio Financiero S.A. acquires Cruz Blanca Seguros Gener-ales, transforming it into Compañía de Seguros Generales Consorcio Nacional de Seguros S.A.

2000Consorcio Créditos Hipotecarios S.A. is authorized to commence operations and Consorcio Corredores de Bolsa S.A. is created. A partnership with Compass Group N.Y. is formalized.

2002The company begins marketing voluntary pension savings (ahorro previsional voluntario, or APV). Consorcio consolidates itself further with the acquisition of CNA, now CN Life Compañía de Seguros de Vida S.A. Fundación Consorcio opens Monte Olivo School in Puente Alto.

2003Consorcio launches the first online stock exchange.Fundación Consorcio wins the Good Corporate Citizen award from the Chilean-American Chamber of Commerce.

2004Consorcio Tarjetas de Crédito S.A. is launched and becomes the lead-ing non-bank issuer of credit cards in the country.

2005Consorcio Corredores de Bolsa de Productos S.A. (commodity exchange) is founded.Consorcio is the first insurance company to offer consumer loans to pensioners.

2006Consorcio celebrates its 90th anniversary and is awarded the Superbrands title by the Chilean Brands Council and Superbrands International.

2008Consorcio launches the first website for car and travel insurance sales.


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2009Consorcio purchases Banco Monex, which becomes Banco Consorcio.Consorcio Financiero’s stake in LVCC Asset Management S.A. reaches 25%, following the merger of Consorcio S.A. Administradora General de Fondos and LarrainVial Administradora General de Fondos S.A.

2010 Consorcio subsidiary CN Life Compañía de Seguros de Vida S.A. begins the sale of annuities.

Mobile applications are launched for Consorcio Seguros Vida and Consorcio Corredores de Bolsa.

2011In its second year of operations, Banco Consorcio makes a capital increase of Ch$ 23,053 million, reaching Ch$ 75,729 million in equity. It successfully places its first subordinated bond for a term of 20 years for an amount of 1.5 million UF, the group’s first public offering.

CN Life receives the 2011 Silver Effie Award for Advertising Effectiveness.

2012Consorcio Financiero S.A. makes a capital increase of Ch$ 127,902 million, which is used to strengthen the equity of its Insurance, Banking and Stock Brokerage subsidiaries.

Consorcio Financiero S.A is the most profitable company in the domestic insurance industry, taking into account profits from its life insurance and general insurance subsidiaries as of December 31, 2012. It also ranks as the largest company in the insurance industry.

Consorcio Financiero S.A., through its subsidiary CN Life Compañía de Seguros de Vida S.A., is awarded two fractions of disability and survivor insurance (SIS) put out to tender by the private pension system.

100 YEARS OF HISTORY

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2013Consorcio Financiero S.A. makes a successful bond placement in the local market for UF 5 million.

Consorcio Seguros Vida is recognized as “Chile’s Best Life Insurance Company” by the prestigious British magazine, World Finance. Consorcio ranks first place in the Insurance Companies category of the Corporate Reputation Ranking compiled by Hill&Knowlton Strategies, GFK Adimark and La Tercera newspaper. The brand is recognized as Superbrand Chile.

2014To strengthen its structure, in 2014 Banco Consorcio incorporates Consorcio Corredores de Bolsa S.A. as a subsidiary, previously a subsidiary of Consorcio Financiero S.A. This will allow the financial entity to expand its product and service offering to customers. Furthermore, it opens two new branches to be closer to clients: El Cortijo, for Corporate Banking, and Apoquindo, specialized in the Mortgage segment.

Consorcio Seguros receives the Top Employer Chile 2014 award from the Top Employers Institute. Consorcio becomes the first Chilean company recognized under this methodology, which certifies Excellence in the conditions that companies provide to their employees.

2015Consorcio Financiero S.A. sells all shares in Moneda Asset Management S.A., equivalent to 16.16% of the property.

Consorcio Financiero S.A. joins the Peruvian insurance market by purchasing 40.1% of Compañía de Seguros La Positiva Vida Seguros y Reaseguros S.A. Through this acquisition, Consorcio joins a high-potential market, with renown local partners, moving the group into the international sphere.

2016Consorcio celebrates 100 years of history with important acknowledgments, such as Top Employer Chile 2016 for the third year in a row and the distinction as the Best Life Insurance Company in Chile by the World Finance Magazine for the second time.

International Finance Corporation (IFC) and the Financial Institutions Growth Fund (FIG Fund), managed by IFC’s Asset Management Company, both owned by the World Bank Group, acquired 8.23% ownership in Consorcio Financiero S.A. in US$ 140 million through a capital increase. The addition of IFC to Consorcio Financiero S.A.’s ownership team constitutes a real contribution, incorporating global knowledge and experience and making its Corporate Governance more robust.

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100 YEARS OF HISTORY AND PRESTIGE IN CHILEIn 2016 Consorcio celebrated 100 years of life, showing that over the course of its history it has become a leading company in the insurance industry in Chile, built on transcendental values such as reliability, prestige and seriousness at all times, empathy and proximity to consumer needs and a spirit of service, which have ensured long-term relationships with customers, brokers and the community.

The pride of belonging to one of the most important holdings in the country and having been part of this history were the inspiration to celebrate these 100 years together with all employees, customers and brokers. Throughout the year, we developed important initiatives, both internally and externally, such as:

100-year celebration: the most important milestone of the year included different celebrations throughout Chile, with activities for our employees, suppliers, insurance brokers and strategic customers. One of these celebrations was held in Club Hípico de Santiago, with over 2,100 people in attendance from the insurance companies and from Banco Consorcio and subsidiaries. An event was held with over 400 people in November for our suppliers, insurance brokers and strategic customers. The aim of these celebrations was to thank the joint efforts that have enabled us to become a leading brand in the insurance industry.

Website www.consorcio100años.cl: in this site, all the employees of the insurance companies were invited to review the most important milestones in the history of Consorcio and to add their own, under the premise, “We are all part of this history.”

Micro-story competition: employees from Arica to Punta Arenas brought out their creativity and submitted their short stories (maximum 100 words) on any subject. Over 150 employees participated and the best 100 stories were published in a book with illustrations.

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“As we celebrate 100 years of history, all that’s left is to reaffirm our long-term commitment towards the development of our company, our industry and our country. As has always been the case, our history of success is thanks to all those people who have made it possible. Our achievements have been possible thanks to the work and efforts of all those who are and have been part of Consorcio -employees, shareholders, brokers, customers, suppliers- and those who have contributed in the construction of a company that is renowned in the industry, build on a history of solidity, growth and support

for our over 1,200,000 customers.”

Marcos Büchi, Chairman of Consorcio Financiero

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HIGHLIGHTS 2016

CONSORCIO FINANCIERO01 CHAP

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BancoConsorcio is themost efficient entity in the localfinancesystem.

Consorcio Seguros celebrates 100 years with customers, distributors, suppliers and employees.

Consorcio obtains first place in Internal Reputation andCorporate Talent Management Ranking.

Active participation in social networks, sharing information and customer service.

International Finance Corporation (IFC), member of the World Bank Group for the private sector joins the ownership team of Consorcio Financiero S.A. after signing a capital increase of US$ 140 million.

Banco Consorcio obtains excellent results in corporate banking,financeandstockbrokerage.

Consorcio Seguros is industry leader with US$ 1,321 million in premium.

Banco Consorcio opens new branch in Puente Alto.

Consorcio Seguros receives the “Top Employer Chile” award for the third year in a row.

Consorcio Seguros is recognized as “Chile’s Best Life Insurance Company” by the British magazine, World Finance.

Banco Consorcio improves its service quality, two prestigious ranking agencies from the finance sector acknowledge thequality of its service.

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DESTACADOS 2016

INTERNATIONAL FINANCE CORPORATION (IFC), MEMBER OF ThE WORLd BANk GROUP FOR ThE PRIvATE SECTOR jOINS ThE OWNERShIP TEAM OF CONSORCIO FINANCIERO S.A. AFTER SIGNING A CAPITAL INCREASE OF US$ 140 MILLION.

In June 2016, the International Finance Corporation (IFC), member of the World Bank Group for the private sector joined the ownership team of Consorcio Financiero S.A.IFC subscribed a capital increase of US$ 140 million, of which US$ 100 million came directly from the IFC and US$ 40 million was contributed by the Financial Institutions Growth Fund (FIG Fund), a Private Fund managed by the IFC Asset Management Company.IFC, the largest global development entity dedicated exclusively to the promotion of the private sector, subscribed 8.23% of the property of Consorcio Financiero S.A.The operation involved an appraisal of Consorcio Financiero S.A., prior to the capital increase, which was over US$1,500 million. The funds for this operation were set aside for the subscription and payment of the capital increase of US$ 70 million in Consorcio Seguros Vida and US$ 70 million in Banco Consorcio, to continue to strengthen its development and growth plans in the insurance and banking sectors.

CONSORCIO SEGUROS IS INdUSTRy LEAdER WITh US$ 1,321 MILLION IN PREMIUM

In the year of its 100/year anniversary, the Consorcio group hit a record in the local insurance industry by becoming the first player in the sector to exceed US$ 1,321 million in direct premiums in the annuities business. This important sales milestone can be explained by the operations of its companies, Consorcio Seguros Vida and CN Life Seguros de Vida, which provide quality consulting and high quality service, a differentiating factor that enabled them to take on important roles in a year of growth in the industry. This continued to be the preferred mode for most workers upon retirement.

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CONSORCIO SEGUROS IS RECOGNIzEd AS “ChILE’S BEST LIFE INSURANCE COMPANy” By ThE BRITISh MAGAzINE, WORLd FINANCE.

Consorcio Seguros is highlighted for the second time as the best insurance company in Chile, thanks to its innovation, creativity and customer satisfaction, and it is recognized as the Best Life Insurance Company in Chile.In this version of the award, the World Finance magazine highlights the way in which the winning insurance companies have addressed current challenges in the industry, such as the explosion of technology, which has affected the insurance purchasing process, offering access to greater customer information, and the significant increase in customer expectations, who are demanding greater flexibility and specialized products. This award is a recognition of the way in which we are developing our business, which is having an effective repercussion in the market and on our customers.

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BANCO CONSORCIO OBTAINS ExCELLENT RESULTS IN CORPORATE BANkING, FINANCE ANd STOCk BROkERAGE

This was a good year for Banco Consorcio, where the main income generator was corporate banking. After a strong growth over three years, in 2016 it consolidated its income, surpassing margin projections for the year. The same occurred with stock brokerage and finance.Corporate banking recorded a margin of Ch$ 31,205 million before fixed expenses, and loans totaling Ch$ 1,670,529 million, while finance had a gross margin of Ch$ 25,593 million. Meanwhile, Consorcio Corredores de Bolsa S.A., earned Ch$ 9,957 million in profits between January and December 2016.

BANCO CONSORCIO IS ThE MOST EFFICIENT ENTITy IN ThE LOCAL FINANCE SySTEM.

Banco Consorcio earned the best efficiency index of the year at 29.8%, which placed it above the 23 banks in the area. Measured as support costs over gross operating revenues, these banks on average obtained 50.4% as of December 2016, a change from the 47.7% for the same period the previous year, according to data from the Superintendence of Banks and Financial Institutions.

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DESTACADOS 2016

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01 CONSORCIO FINANCIERO

CONSORCIO SEGUROS CELEBRATES 100 yEARS WITh CUSTOMERS, dISTRIBUTORS, SUPPLIERS ANd EMPLOyEES.

On November 03, 2016, Consorcio celebrated its 100-year anniversary with suppliers, insurance brokers and strategic distributor customers at a dinner at the Mapocho Golf Club. 400 guests attended this event.The chairman of Consorcio Financiero, Marcos Büchi highlighted the importance of distributor customers as “a key to the success” of the group. “Their preference in working with us in a very competitive environment, choosing Consorcio as primary partner from among the companies, has enabled us to grow systematically over the years and reach a significant market share in individual insurance,” he said.

CONSORCIO SEGUROS RECEIvES ThE “TOP EMPLOyER ChILE” AWARd FOR ThE ThIRd yEAR IN A ROW.

In 2016, for the third year in a row, the insurance companies in the Consorcio Group earned the “Top Employer Chile” certification from Top Employers Institute, an entity that analyzes the most relevant work practices and standards in around 1,100 certified companies around the world. The “Top Employer” ranking acknowledges and certifies that the working practices and conditions of the Consorcio Financiero insurance companies meet the highest international standards.

BANCO CONSORCIO IMPROvES ITS SERvICE qUALITy, TWO PRESTIGIOUS RANkING AGENCIES FROM ThE FINANCE SECTOR ACkNOWLEdGE ThE qUALITy OF ITS SERvICE.

In 2016, Banco Consorcio has placed emphasis on the quality of its service. From this perspective, two prestigious ranking agencies for the financial sector have acknowledged the quality of its services.The first ranking comes from the National Consumer Service, SERNAC, and ranks Banco Consorcio as the second-best bank in terms of listening to and responding to customer complaints in the finance system.The second ranking is from the Servitest survey, a syndicated study of bank that measures the service provided by banks from the customer perspective. In this ranking, Banco Consorcio grew two points over the ranking from the previous year, consolidating an improvement of 17 points in the last two years.

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ACTIvE PARTICIPATION IN SOCIAL NETWORkS, ShARING INFORMATION ANd CUSTOMER SERvICE.

In 2016, Consorcio maintained an active presence in social networks, providing its customers with useful content, reliable information and even online help and solutions to their questions and requirements. Thanks to this strategy, the group achieved significant numbers for the industry in all of its platforms, with 246,838 average monthly visits to Consorcio.cl, 66,885 Facebook fans and 3,601 Twitter followers by December 2016. The Consorcio.cl Youtube channel had a record 117,669 views in July 2016.

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BANCO CONSORCIO OPENS NEW BRANCh IN PUENTE ALTO.

Banco Consorcio continued to increase its presence in the Metropolitan Region in 2016, after inaugurating a branch in Puente Alto in April. This district concentrates an important percentage of the prime customers from the South Mountain Area, estimated to be at least 20,000 potential customers in the mass banking target segment through its directed sales model.

CONSORCIO OBTAINS FIRST PLACE IN INTERNAL REPUTATION ANd CORPORATE TALENT MANAGEMENT RANkING.

In 2016, Consorcio ranked first place in the sector ranking of the international consultant Merco Personas, which assesses how companies attract and retain their employees, as well as the quality of the work environment and internal and external reputation.

2006 / 2013SUPER BRANdChILE

Awarded by the Consejo de Marcas de Chile (Brand Council of Chile).

2012SILvER BIG AWARd

For the ‘Convención de los Mejores’ campaign in the category of internal marketing.

2014 / 2015TOP EMPLOyER ChILE

Awarded to Consorcio Seguros by International Organization Top Employers Institute.

2014INTERNAL REPUTATION ANd CORPORATE TALENT MANAGEMENT RANkING

Awarded to Consorcio Seguros by Merco Personas.

2013FIRST PLACE BEST LIFEINSURANCE COMPANy IN ChILE

Awarded by English magazine World Finance.

2013FIRST PLACE CORPORATE REPUTATION, INSURANCE COMPANyCATEGORy

Compiled by Hill&Knowlton Strategies, GFK Adimark and La Tercera.

2009SILvER EFFIE

For the SOAP Campaign and electronic sales of obligatory personal accident insurance.

2011SILvER EFFIE

For the launch of the CN Life brand.

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2014FIRST PLACE COMPANy ThAT PROvIdES ThE BEST CUSTOMER ExPERIENCE

Best Customer Experience awarded to Consorcio Seguros Generales by IZO.

Alongside the innovation and growth of its business, Consorcio’s customer-oriented focus is also reflected in the awards it has received from both consumers and different stakeholders in the market. It was selected as the best company in the insurance sector in Chile and two important consulting firms awarded the group’s concern for its employees, which supports its commitment of maintaining the highest standards.

MAjOR dISTINCTIONS IN ThE yEAR

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2016

FIRST PLACE BEST LIFEINSURANCE COMPANy IN ChILE

In 2016, the prestigious English magazine World Finance awarded the best insurance companies around the world who lead their respective markets.

TOP EMPLOyER ChILE 2016

Consorcio Seguros was certified as “Top Employer Chile” for the third year in a row. This ranking acknowledges and certifies working practices and conditions that meet the highest international standards.

FIRST PLACE INTERNAL REPUTATIONANd CORPORATE TALENT MANAGEMENT RANkING

Consorcio Seguros ranked first place in the sector ranking of the international consultant Merco Personas, which assesses how companies attract and retain their employees, as well as the quality of the work environment and internal and external reputation.

100 YEARS OF INNOVATIONAND MODERNITY

providing the best customer service experience and a full satisfaction of

security, protection and financing needs

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02CORPORATEMANAGEMENT

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• CORPORATE GOVERNANCE PRINCIPLES

• SUSTAINABILITY

• FUNDACIÓN CONSORCIO VIDA AND MONTE OLIVO SCHOOL

• BRAND MANAGEMENT

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CORPORATE GOVERNANCE PRINCIPLESConsorcio Financiero S.A. uses corporate governance principles that are in line with best practices and applicable regulations, based on the Group’s strategic foci.

Based on the corporate vision, mission and values, these principles of corporate governance support the determination of strategies to follow for the creation of value for shareholders, clients, partners and other stakeholders.

This corporate governance creates a clear structure in which the committees formed by directors and executives play an important role in the implementation, oversight and monitoring of the entity’s different strategies and policies.

These committees meet regularly, have defined objectives and have their own bylaws, which consider the definition of roles and responsibilities of participants. These instances contribute efficiently to Consorcio’s corporate governance, enabling it to meet the highest standards in the field.

Consorcio Financiero S.A., which controls the companies that are part of the Consorcio holding, constantly seeks to generate mechanisms that facilitate relationships among the different business units in accordance with current regulations, thus taking advantage of synergies in terms of finance, operations and management. It also leads the process of planning and defining strategic objectives for each individual business. Each of the entities that form part of the holding has its own Board of Directors and specific units that are involved with its governance within the framework defined by Consorcio.

The Board of Directors of Consorcio Financiero S.A. has nine members and has an audit, corporate governance and talent retention committee, made up of three directors, which also includes the participation of the CEO of the holding company as well as the CEOs of the main subsidiaries. Its main purpose is to support the Board of Directors on issues of internal control, audit, corporate governance and talent retention for insurance companies, the bank and other subsidiaries.

The Chief Executive Officer of Consorcio Financiero S.A. is responsible for overall management of the parent company and works closely with subsidiaries to ensure that they achieve their strategic goals and objectives in order to increase the creation of corporate value.

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ShAREhOLdERS’ BOARd

BOARd OF dIRECTORS

FINAN

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ExECUTIvE COMMITTEE

BUSINESS OPERATIONS

INVESTMENTS COMMITTEE

RISK COMMITTEE

PEOPLE, ETHICS AND COMPLIANCE

COMMITTEE

AUDIT, CORPORATE

GOVERNANCE AND TALENT RETENTION COMMITTEE

STRATEGIC COMMITTEE

TECHNICAL, SALES AND CUSTOMERS COMMITTEE

CORPORATE GOVERNANCE MAIN SUBSIDIARIES

INSURANCE COMPANIES

El holding Consorcio Financiero cuenta en Chile con tres aseguradoras: Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. (Consorcio Seguros Vida), CN Life Compañía de Seguros de Vida S.A. (CN Life Seguros Vida) y Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. (Consorcio Seguros Generales).

Los elementos principales del Gobierno Corporativo de estas compañías están plasmados en un código aprobado por el Directorio respectivo en conformidad con la normativa vigente, así como también con las recomendaciones y buenas prácticas a nivel local e internacional.

CORPORATE GOVERNANCE ELEMENTS

Corporate governance of each of these companies is comprised of different entities and functions, including the shareholders, the Board of

In September 2016 for the first time, each of the three companies conducted a self-assessment of

compliance with corporate governance principles established in standard NCG N° 408 at the

December 2015 close date. The information was sent opportunely to the Chilean Securities and Insurance Supervisor, as required by legislation.

Directors and its Committees of Directors, the Executive Committee including senior management, addressing issues of financial oversight, compliance, internal auditing and risk management. The Corporate Governance Code defines roles and responsibilities for each of these units, which contribute towards ensuring a solid governance of the companies.

SHAREHOLDERS’ BOARD

This is the highest authority and supreme body of the entity. Each year, shareholders review the company’s position and the reports issued by external auditors. Shareholders also elect members of the board of directors and designate the independent external auditors and risk rating agencies.

BOARD OF DIRECTORS

The Board is ultimately responsible for the company’s performance. It establishes strategies and policies that ensure good management in compliance with applicable laws and regulations, and periodically reviews their relevance and efficacy.

The Board acts in compliance with principles of ethics and corporate social responsibility.

The Board is made up of seven members, including a Chairperson. The members of the Board of Directors serve three-year terms and may be reelected indefinitely.

In order to complete its work more efficiently, the Board has established a series of committees composed of directors and senior management. Each of these committees has its own bylaws approved by the board, which set out their specific objectives and functions, members, organization and operation.

These committees have been in place for several years, and they reaffirm Consorcio’s commitment to the ongoing strengthening of its corporate governance. The insurance companies currently have six directors’ committees:

AUDIT, CORPORATE GOVERNANCE AND TALENT RETENTION COMMITTEE

Supervises the effectiveness of the risk and control area, the integrity of financial statements and the internal and external audit processes.

INVESTMENT COMMITTEE

Establishes the company’s financial strategies and policies, overseeing their implementation and supporting the Board of Directors in management of financial risks, consistent with policies established in this area.

RISK MANAGEMENT COMMITTEE

Supports the Board of Directors in establishing the Integral Risk Management System and oversees its implementation.

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STRATEGIC COMMITTEE

Participates in defining the corporate strategy and monitoring compliance with it, and also makes proposals to the Board regarding the corporate governance structure and principles to support this strategy. It also proposes principles for disclosing information to different interest groups.

PEOPLE, ETHICS AND COMPLIANCE COMMITTEE

Ensures that people management is consistent with the strategy and based on ethics and respect for corporate values. It also establishes and updates the compliance policy, monitoring its implementation.

TECHNICAL, COMMERCIAL AND CUSTOMER COMMITTEE

Provides support to the Board in relation to strategies and policies on technical and commercial matters, as well as those related to customers, and monitors their appropriate implementation.

EXECUTIVE COMMITTEE

Led by the CEO of the insurance companies, this Committee is responsible for proposing policies and business strategies to the board and executing them after they have been approved. In addition, it is responsible for properly managing the company, protecting the interests of shareholders and other interest groups.

It is made up of the CEO and corporate managers from the following areas:

• Internal Audit• General Counsel• Risk Management• People• Commercial• Marketing and Customers• Technical and Financial Oversight• Investments• Real Estate Business• Operations and Technology

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BANCO CONSORCIO

The Bank’s corporate governance practices are subject to its statutes, the General Law on Banks, the Law on Corporations, the Securities Market Law and applicable regulations of the Chilean Banks and Financial Institutions Supervisor (Superintendencia de Bancos e Instituciones Financieras de Chile, or SBIF) and the Chilean Securities and Insurance Supervisor (SVS).

Banco Consorcio corporate governance:

• Board of Directors• Chief Executive Officer• Executive Committee• Audit Committee• Higher Committees• Strategy and Indicators• Manuals and Procedures

BOARD OF DIRECTORS

This is the highest authority of Banco Consorcio’s corporate government. It defines the strategic lines of the organization and its mission is to maximize the Bank’s long-term value. It has all the management faculties that the law does not establish as exclusive to the shareholders’ board, without requiring the issuance of any special powers for such. The board of directors periodically receives a presentation on Bank management, results and primary risks, and is kept informed on a regular basis of the materials examined and approved by the different Bank committees, to which it delegates part of its functions.

EXECUTIVE COMMITTEE

It guides the Bank toward achieving its strategic goals and objectives and leads the Bank’s human capital in order to satisfy our customers, employees and shareholders. It defines and coordinates activities to ensure compliance with guidelines from the Board of Directors, maximizing the Bank’s value and complying with current laws.

HIGHER COMMITTEES

Higher committees are made up of directors and management executives. They meet regularly and in varying intervals. Their nature, functions and activities are determined by both Bank needs and legal requirements. This allows an in-depth analysis of specific matters and provides the board of directors with the information necessary for a discussion of general policies and guidelines that govern Banco Consorcio’s business.

They represent the board of directors on different Bank objectives. They must uphold standards of efficiency and proper functioning of internal processes.

AUDIT AND COMPLIANCE COMMITTEE

It reviews the various areas that involve maintenance, application and functioning of the company’s internal oversight systems and compliance with standards and procedures governing their practice, based on a clear understanding of the risks that its business activities may pose to the institution.

ASSET-LIABILITY AND FINANCIAL RISK COMMITTEE (CAPA)

It defines the primary investment strategies that must be carried out by the Money Desk, establishes policies and procedures and ensures that the business areas are correctly implementing the approved risk management strategy. It provides global management of the Bank’s balance sheet and liquidity and evaluates the main market risks, capital needs and the implementation of capital policy. CAPA approves models for measuring liquidity and market risk, as well as the associated limits.

OPERATIONAL RISK COMMITTEE

It coordinates activities to ensure the appropriate management of operational risk, is aware of the business continuity plan, assesses periodic testing and monitors adequate management of critical suppliers. It also approves exposures to these risks within the limits established by the board of directors.

MONEY LAUNDERING AND TERRORISM FINANCING PREVENTION COMMITTEE

It plans and coordinates activities related to policies and procedures for preventing money laundering and terrorism financing. It must also be aware of the work and operations carried out by the Compliance Officer and make decisions about improvements to control measures proposed by the Compliance Officer.

CREDIT RISK AND COLLECTIONS COMMITTEE (PORTFOLIO COMMITTEE)

It determines policies and procedures that affect credit risk and monitors the evolution of loan portfolio quality.

SERVICE QUALITY AND INFORMATION TRANSPARENCY COMMITTEE

Its purpose is to design and oversee the procedures and strategies for achieving excellent customer service, within the standards required by law and as defined by the board of directors.

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BUSINESS DEVELOPMENT COMMITTEE

It analyzes, monitors and recommends the generation of new business and growth opportunities, to leverage the corporate strategy and guarantee the Bank’s growth and development.

HUMAN RESOURCES COMMITTEE

It establishes specific tasks and courses of action that enable issues such as labor law, compliance with policies, standards and internal processes. It also establishes all necessary actions to support the development of collaborators, thereby facilitating decision-making processes related to human resources within Banco Consorcio.

HIGH COMMITTEE ON COMMERCIAL LOANS

Its purpose is to provide credit risk assessment for amounts above US$ 1 million.

MAIN EXECUTIVE FUNCTIONS

Banco Consorcio has an executive team that oversees the proper implementation of business policies and strategies approved by the Board of Directors, and ensures a proper administration, in line with its mission and vision.

This team is led by the CEO and made up of the following divisions:

• Retail Banking• Commercial Banking• Finance• Stock Brokerage• Risk Management• Operations and Financial Oversight• Administration and Technology• Legal and Compliance• Comptroller• Human Resources• Business Development • Marketing and Customer Services Subdivision

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40

SUSTAINABILITYConsorcio Financiero S.A. has defined a corporate strategy based on a comprehensive sustainable outlook of its management, to ensure satisfactory relationships developed mutually with employees, customers and the community.

The holding interacts responsibly with its main stakeholders and seeks to meet their legitimate interests, generating value for shareholders and contributing to the development of the country.

The Environmental and Social Management Policies, approved by the Boards of the Consorcio Financiero S.A. subsidies, describe the commitments, functions and responsibilities needed to achieve the goals defined for environmental and social management.

SUSTAINABLE MANAGEMENT OF CONSORCIO FINANCIERO AND IFC SUPPORT

In 2016, sustainable management was strengthened when the International Finance Corporation (IFC) joined the ownership team. This organism is part of the World Bank Group and is the principal international development institution that focuses its work on the private sector in emerging market countries.

In each of the companies where it has a presence, the IFC promotes and fosters compliance with corporate social and environmental policies that contribute to increasing environmental protection and support the development of local communities. IFC shares its global knowledge, good practices and management models for a fully successful sustainability management.

ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM (ESMS)

To manage environmental and social risks and opportunities, the IFC promotes the development of Environmental and Social Management Systems (ESMS), which Consorcio Financiero subsidiaries are already implementing. The ESMS is made up of a policy, roles and responsibilities, procedures, activities and reports to identify, assess and manage environmental and social risks regarding operations on an ongoing basis.

The main lines of action of Consorcio’s ESMS are the following:

• Business operations• Human resources management• Community support in the social sphere• Promotion and/or support of activities with the communities that

generate value

In 2016, the subsidiaries of Consorcio Financiero S.A. made progress in establishing the corresponding policies and developing the procedures required for implementation.


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41

FUNDACIÓN CONSORCIOPROVIDING EDUCATION IN ONE OF SANTIAGO’S MOST VULERABLE SECTORS

The vocation to be a responsible corporate citizen and generate a bond and positive contribution with the community is present from Consorcio’s origins. In the 1980s, when the concept of Corporate Social Responsibility was not yet ingrained as a corporate trend, the company founded Fundación Consorcio, whose initial focus was on funding projects to support unprotected children and the elderly, as well as health, education and culture.

From its early days, the foundation was highly professional, run by a board and a project coordinator who worked together to define the different projects it would fund, based on technical characteristics.

In early 2000, Fundacion Consorcio wanted to make a qualitative leap in its social contribution and decided to develop, build and manage a school run directly by the Foundation that would positively impact a high-need sector.

The outcome of this was the formation of the Monte Olivo subsidized private school in Puente Alto, whose mission is to provide quality education to children and youth in the Bajos de Mena neighborhood in the same district.

The choice of the place speaks specifically to the desire of Fundación Consorcio to make concrete improvements in a highly vulnerable place.

Bajos de Mena is located in the far southwestern end of Puente Alto, and despite being one of the most populated areas nationally -with close to 120 thousand inhabitants- it has over 140 social housing projects, including Villa El Volcán. Most of its population is characterized by its high social vulnerability index: 65% of the population falls into the lowest 20% income bracket.

Monte Olivo School is responsible for the education of over one thousand children from pre-kinder to 12th grade in this part of Santiago, following a science- and humanities-based curriculum. The results obtained by the school are well above the average for schools in the district.

Located in Bajos de Mena, a vulnerable neighborhood in Puente Alto, Monte Oliva

School provides over one thousand students with the support, protection and learning experiences they require for their future.

95.3%of students

TOOk ThE PSU (ACAdEMIC

STANdARdIzEd TEST) 2016

92.3%AvERAGE

ATTENdANCEof students in 2016

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CHAP

.533

AvERAGE PSU SCORE 2016

(national average: 526)

26%of its alumni

WENT ON TO STUdy

TEChNICAL dEGREES

Over 48%of graduates ENTEREd

UNIvERSITy

After finishing their degrees and professional internships, two Monte Olivo School alumni now

work at Consorcio Seguros. During 2016-2017, another three Monte Olivo

students interned at Consorcio Seguros.

MONTE OLIVO SCHOOL

RESULTS OF 15 YEARS OF WORK

The Monte Olivo School educational project seeks to provide support and generate significant interactions and educational experiences that forge the character of its students and guides their learning process, taking care to develop the maximum cognitive, social and spiritual potential of the students, so they have the tools necessary to continue on to higher education or the workforce.

After 15 years of work, Monte Olivo School has proven that its students are capable of overcoming adversity and obtaining solid results, confirming that the foundation has been on the right track by focusing its efforts here.

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RELATIONSHIP WITH THE COMMUNITY

Consorcio Financiero holds diverse activities with the students from Monte Olivo School. These initiatives include the delivery of agendas at the start of the school year, a Christmas celebration and gift giving to students from pre-kinder to 8th grade and awards for academic excellence for students with a grade point average equal to or above 6.5 out of 7.0 total. In 2016, 99 students were awarded.

In addition to these support mechanisms, the aim is to help these young people make positive connections with the working world. The foundation accomplishes this through tutoring programs where students receive tailored support. It also designs several events where students visit Consorcio Financiero facilities to experience the working world firsthand.

Likewise, company executives participate in formal spaces such as the Managing Council and the Board of Directors of Fundación Consorcio, and Consorcio Financiero holds different activities to foster the relationship between subsidiary employees and students.

Monte Olivo students periodically visit Consorcio Financiero facilities in activities where they can

show their talent and take on new challenges. As part of the 100-year celebration, on September 12, 2016, the Monte Olivo School Choir held a presentation in the Consorcio auditorium. The repertoire included classical music and folklore music, where students were able show off their

talents through song and dance.

In December, a 67-member music group from the school opened the Christmas season with

Christmas caroling.

As part of the 100 year celebrations, Consorcio decided to give all Monte Olivo students from

pre-kinder to 8th grade, an unforgettable Christmas. The company invited 840 students

to spend a day of fun and learning at Kidzania, a children’s amusement park in the district of

Las Condes.

BRAND MANAGEMENT

100 YEARS OF LEADERSHIP, RELIABILITY AND COMMITMENT WITH CUSTOMERS

For Consorcio, building and maintaining leadership is a permanent challenge, which is why 100 years of successful history in the insurance industry in Chile is cause for celebration. The brand today is an important asset for the Group’s value creation, and a coherent and consistent management over time has given it the reputation of a solid brand and industry leader, whom customers trust when they seek out advice and plan for their future.

Over these 100 years and through a wide offering of products and services in the insurance, pension, savings and banking business, Consorcio has reached important milestones in the finance industry. For example, it was the first company to sell insurance associated with voluntary pension savings, it was pioneer in direct online stock brokerage, the first insurer to give consumer loans to pensioners and the first non-bank issuer of credit cards in Chile. It has consolidated as one of the most important financial groups, which is reflected in the growth and development of different subsidiaries and business lines.

In today’s increasingly competitive environment, social changes, the current crisis of faith seen in the country and changes in consumers make it necessary to consolidate the relationship between brands and customers, establishing long-term trust-based relationships, grounded in the provision of tailored advice and information, with an approachable, proactive and timely vocation of service, based on an awareness of needs to provide the peace of mind and protection they need.

In this context, management of the Consorcio brand has consistently focused on ensuring that customers perceive a single image of the company, across the different media and the platforms they use, so that they associated attributes such as closeness, modernity, security, trust, transparency with the Consorcio brand, where empathy and connection with what is really important for people, are decisive every time customers choose a financial services company.

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Nos mueveTu Futuro

Nos mueveTu Tranquilidad

CREATING VALUE BECAUSE “YOUR LIFE IS WHAT MOVES US”

Being a market leader is possible thanks to a consistent brand effort, based on a history of solidity and support for its more than two million customers. In this context, in 2016 the Consorcio brand was given a new impetus, building on its 100-year milestone and its brand capital, confidence and solidity.

The advertising campaign “YOUR life is what moves us” sought to highlight the solidity, history and support that Consorcio delivers to its customers and strengthen the brand’s communication with the middle segments, enhancing its image in this dynamic segment. The slogan “YOUR life is what moves us” had a high level of recall and appreciation among customers and allowed us to consolidate the message that Consorcio has spent the past 100 years learning and understanding what is really important for people and their families, recognizing the special concern and closeness that the brand has with its current and potential customers.

The 2016 advertising campaign achieved greater visibility and a transversal impact in the segments ABC1C2 and C3, where it reached over 80% of advertising recall, placing Consorcio among the top three brands in the category, with a high level of visibility, where 98% of those who saw the advertising associated it correctly with the brand.

In summary, the 2016 advertising campaign led to a positive improvement in Consorcio’s brand image by correctly communicating the proposed attributes, in addition to transmitting a comprehensive offer of Consorcio products, beyond insurance.

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MORE ThAN 80%AdvERTISING RECALL

in ABC1C2 and C3 segments

V IDA ES LOQUE NOS MUEVE

Nos mueveTu Futuro

Nos mueveTu Tranquilidad

Nos mueveTu Familia

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BRAND RECALL LEADERSHIP IN THE ABC1C2 SEGMENT

These positive results of the advertising campaign allowed Consorcio Seguros to once again achieve leadership in the main brand recall indicators, standing out as one of the brands preferred by customers in the insurance industry.

The Consorcio brand consolidated its leadership in Top of Mind (TOM), showing a solid performance in the ABC1C2 segment, growing from 12% in 2015 to 15% in 2016. It obtained first place in the C2 segment, with 17% of preferences, leading the category in this segment.

Meanwhile, in life insurance, the brand increased its TOM from 11% to 17% overall, leading the category in ABC1C2, while auto insurance showed a sustained growth, from 8% in 2015 to a 12% in 2016, as one of the three most preferred brands in the auto insurance category.

In terms of Spontaneous Total Brand Recall, Consorcio led the insurance category in the ABC1C2 segment, moving from third place with 42% of mentions to first place with 53% at the end of 2016.

The results by product line in the ABC1C2 segment show a significant growth in brand recall, reaching third place in the auto insurance category, with 39% of total mentions, while life insurance reached first place with 48% in 2016.

Consorcio’s improved performance in its brand knowledge and recall indicators led to a significant increase in the future insurance recruitment indicator among potential customers in the ABC1C2 segment.

1ST PLACETOTAL SPONTANEOUS RECALL

INdICATORas of 2016 year-end

Source: 2016 Image and Positioning Study, Cadem.


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ACKNOWLEDGMENTS AND ACHIEVEMENTS

Alongside the innovation and growth of its business, Consorcio’s customer-oriented focus is also reflected in the awards it has received from both consumers and different stakeholders in the market.

In 2016, it was awarded by the prestigious English magazine World Finance, which recognized Consorcio as the “Best Life Insurance Company in Chile.” In this version of the award, the publication highlighted the way in which insurance companies have addressed current industry challenges, such as the breakthrough of technology and the strong increase in customer demands. This distinction was also awarded by World Finance magazine to Consorcio in 2013.

This distinction is joined by other important recognitions achieved by the brand, such as: • First place in the insurance companies category in the 2013

Corporate Reputation Ranking compiled by Hill&Knowlton Strategies and GFK Adimark.

• Recognition as a “Chile Superbrand” in 2006 and 2014, by the International Council of Trademarks and Consumers.

• The Best Customer Experience (BCX) award given by the company IZO in 2014. This award highlighted Consorcio Seguros Generales as the company that provided the best customer experience, based on brand valuation, product satisfaction and management of customer interactions.

These achievements reaffirm the leadership of the Consorcio brand on a level of consumers and different market players. They also commit us to continue working every day in consolidating a brand positioning that generates more confidence among the people in the insurance industry.

Consorcio consolidates its positioning as the brand that generates more confidence in the

insurance industry.

100 YEARS OF SAFETYAND RELIABILITY

providing professional advice and support at every stage of life, so you can enjoy

today with confidence while you plan for tomorrow

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03COMPANYINFORMATION

COMPANY DETAILS

Corporate Name: Consorcio Financiero S.A.Type of company: Private CorporationPrimary activities: Consorcio Financiero participates, through

its subsidiaries, in life and general insurance, banking and financial investments.

Chilean ID (RUT): 79.619.200-3Legal address: Av. El Bosque Sur 180, 3rd floor, Las Condes,

Santiago, Chile.Telephone: (56 -2) 2230 4000Fax: (56 -2) 2230 4050P.O. Box 232 Agencia 35, Providencia, Santiago, Chile

LINE OF BUSINESS

The purpose of corporation is the development and implementation of business and any other activities directly or indirectly related to owning, buying, selling, renting, managing and other legal acts associated with any type of equipment or real estate. For fulfillment of its corporate purpose, the corporation may acquire and transfer any title, and give and take on lease or other form of tenure, all sorts of real estate or personal property; receive and give out loans, both in domestic and foreign currency, levy mortgages or pledges of any kind; and generally, perform all acts and enter into all contracts related to the indicated purposes and development of its purpose or trade. The Company may enter into and/or hold all kinds of acts or contracts involving significant amounts of money as defined in the relevant sections of the Law on Corporations, in which one or more directors have an interest personally or as representatives of another person, even if such operations are not known and previously approved by the board. All of the above is according to the terms established by law number eighteen thousand and forty-six and other relevant legislation.

ARTICLES OF INCORPORATION

Consorcio Financiero S.A. was constituted as a limited liability company through public deed dated January 16, 1986, signed before Santiago notary public Aliro Veloso Muñoz under the name BT (Pacific) Limited y Compañía Limitada. The abstract of said public deed was recorded in the Commerce Registry of the Santiago Real Estate Registrar on page 1,112, No. 551 on January 17, 1986 and was published in the Official Gazette on January 18, 1986. The company´s name was changed to Consorcio Financiero S.A. through public deed dated September 29, 1999, signed before Santiago notary public Aliro Veloso Muñoz. An abstract of said public deed was recorded in the Commerce Registry of the Santiago Real Estate Registrar on November 3, 1999 on page 26,939 No. 21,431 and published in the Official Gazette on November 08, 1999.

50

03 COMPANY INFORMATION

CHAP

.

Subsequently, the company’s bylaws were modified in order to adjust their objectives to the new requirements of Law 18,045, as recorded in the public deed dated October 14, 2010, signed before Santiago notary public Humberto Santelices Narducci. An abstract of said public deed was recorded in the Commerce Registry of the Santiago Real Estate Registrar on October 20, 2012 on page 55,588 N° 38,680 from the year 2010 and published in the Official Gazette on October 22, 2010 and in order to increase share capital, as recorded in the following public deeds: a) On July 23, 2012, in the Santiago notary public Humberto Santelices Narducci, whose abstract was recorded in the Commerce Registry of the Santiago Real Estate Registrar on page 54.981, No. 38,436 on August 09, 2012, and was published in the Official Gazette on July 28, 2012.b) On September 03, 2012, in the Santiago notary public Humberto Santelices Narducci, whose abstract was recorded in the Commerce Registry of the Santiago Real Estate Registrar on page 64.322, No. 44,773 on September 11, 2012, and was published in the Official Gazette on September 10, 2012.c) On June 11, 2016, in the Santiago notary public Humberto Santelices Narducci, whose abstract was recorded in the Commerce Registry of the Santiago Real Estate Registrar on page 42.782, No. 23,473 on June 13, 2016, and was published in the Official Gazette on June 15, 2016.

OWNERSHIP

Consorcio Financiero S.A. shareholders as of December 31, 2016:

ShAREhOLdERS TOTAL ShARES % ShARE

BANVIDA S.A. 57,551,628 42.02P&S S.A. 57,551,628 42.02INTERNACIONAL FINANCE CORPORATION 8,057,902 5.88BP S.A 7,677,553 5.61CALVERTON SPAIN S L 3,223,161 2.36EL BOSQUE FONDO DE INVERSIÓN 1,445,096 1.05TOBALABA FONDO DE INVERSIÓN 1,445,095 1.05

136,952,063 100

Banvida S.A. is a publicly-held corporation controlled by the Fernández León family and the Garcés Silva family; P&S S.A. is a private corporation controlled by the Hurtado Vicuña family.

In June 2016, the International Finance Corporation (IFC) and Calverton Spain S.L. joined the ownership team of Consorcio Financiero S.A.

IFC is part of the World Bank Group and is the principal international development institution that focuses its work on the private sector in emerging market countries, and Calverton Spain S.L. belongs to the FIG Fund, a private fund managed by the IFC Asset Management Company.

EMPLOYEES OF THE PARENT AND ITS SUBSIDIARIES

As of December 31, 2016, Consorcio Financiero S.A and its subsidiaries had a total of 2,802 employees, an increase of 0.5% relative to December 2015. The holding company’s human team is comprised mostly of women (65.4% of the total workforce). The company’s branch offices span Chile, from Arica and Punta Arenas. Seven branches are in Santiago and 21 are located outside of Santiago and employ 25.7% of the total workforce.

COMPANy MANAGERS ANd kEy ExECUTIvES

PROFESSIONALS ANd TEChNICIANS AdMINISTRATIvE STAFF SALES ExECUTIvES ANd

MANAGERS GENERAL TOTAL

CONSORCIO VIDA 66 365 360 960 1,753BANCO CONSORCIO 37 270 121 233 661CONSORCIO GENERALES 9 134 108 23 274STOCK BROKERAGE 7 23 18 48CONSORCIO SERVICIOS 1 35 36CN LIFE 17 6 23BIENESTAR 3 3CONSORCIO FINANCIERO 2 2 4OvERALL TOTAL 123 815 648 1,216 2,802

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REGULATORY FRAMEWORK

Consorcio Financiero S.A. and its subsidiaries are subject to the provisions of the Corporations Law (No. 18,046), the Securities Market Law (No. 18,045), the regulations of the Chilean Securities and Insurance Supervisor (SVS) regulations, Consumer Protection Law (No. 19,496), the General Banking Law, as well as all laws and regulations that apply to its lines of business.

REMUNERATIONS TO THE BOARD OF DIRECTORS AND MANAGEMENT

The company’s Board of Directors have received the following remunerations from Consorcio Financiero S.A. in 2016: NAME UF 2016 UF 2015*

Büchi Buc, Hernán 600.0 - Büchi Buc, Marcos 1,027.1 - Fernández León, Eduardo 600.0 - Garcés Silva, José 600.0 - Hurtado Vicuña, Juan 600.0 - Hurtado Vicuña, Pedro 725.6 - Mac-Aulife Granello, Juan 725.6 -Mendoza Zuñiga, Ramiro 676.5 - Restrepo Sergio 1,504.5 -

NAME UF 2016 UF 2015

Iñiguez Ducci,Pedro Felipe 150.0 -Del Río Montt, Juan Diego 150.0 -

Functions of the Director held during June and July 2016*The company’s Board of Directors did not receive remunerations from Consorcio Financiero S.A. in 2015.

Total remunerations received by key executives at Consorcio Financiero, Consorcio Seguros, Banco Consorcio and subsidiaries amounted to Ch$ 6,294 million in 2016. (Ch$ 5,509 million 2015).

CONSORCIO FINANCIERO BOARD OF DIRECTORS

NUMBER OF PEOPLE PER GENDER

Female - Male 9 TOTAL 9 NUMBER OF PEOPLE PER NATIONALITY

Chilean 8 Foreign 1 TOTAL 9 NUMBER OF PEOPLE PER AGE RANGE

under 30 - From 30 to 40 -

From 41 to 50 -

From 51 to 60 3

From 61 to 70 4

71 and older 2

TOTAL 9

NUMBER OF PEOPLE BASED ON LONGEVITY

Less than 3 years 3

Between 3 and 6 years 1

Between 6 and 9 years -

Between 9 and 12 years -

12 or more 5

TOTAL 9 52


CHAP

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53

2,802PEOPLE WORk IN

CONSORCIO FINANCIEROAS OF DECEMBER 31, 2016

1,833WOMEN

969MEN

EXECUTIVE COMMITTEE (CONSORCIO SEGUROS AND BANCO CONSORCIO)

NUMBER OF PEOPLE PER GENDER

Female 4 Male 21 TOTAL 25 NUMBER OF PEOPLE PER NATIONALITY

Chilean 24 Foreign 1 TOTAL 25 NUMBER OF PEOPLE PER AGE RANGE

under 30 - From 30 to 40 7

From 41 to 50 9

From 51 to 60 9

From 61 to 70 -

71 and older -

TOTAL 25


Less than 3 years 3




12 or more 11

TOTAL 25

ORGANIZATION

NUMBER OF PEOPLE PER NATIONALITY

Chilean 2,775 Foreign 27TOTAL 2,802NUMBER OF PEOPLE PER AGE RANGE

under 30 366 From 30 to 40 879

From 41 to 50 855

From 51 to 60 579

From 61 to 70 114

71 and older 9

TOTAL 2,802


Less than 3 years 1,306




12 or more 401

TOTAL 2,802

SALARY GAP

Salary gap by gender corresponds to the definition in the General Character Standard N° 386 of the SVS: “indicate the proportion that represents the average base gross salary, per type of position, responsibility and duty performed, for female executives and employees in comparison to male executives and employees.”

SALARY GAP - PROPORTION OF WOMEN IN COMPARISON TO MEN

Executives 82%Admin. and business teams 88%

BUSINESS RELATIONSHIPS WITH SUBSIDIARIES

In its role as parent company, Consorcio Financiero S.A. has business relationships with its subsidiaries. Outstanding current account loans exist between the parent and subsidiaries, as well as between subsidiaries, all of which are carried out in conditions equal to those that normally prevail in the market.

ACTS AND CONTRACTS

Consorcio Financiero S.A. has neither conducted any operations with subsidiaries nor held any valid contracts with subsidiaries that significantly influenced the company’s performance.

SUPPLIERS

There are no relevant suppliers worth mentioning. The corporation operates with those who offer the best conditions considering the features of the services required.

COMPANY REAL ESTATE AND BELONGINGS

The company does not own any real estate.

TRADEMARKS AND PATENTS

As the parent company, Consorcio Financiero S.A., does not hold any registered trademarks in any of the categories corresponding to the fields in which its subsidiaries and affiliates operate. Trademarks are registered directly in the different subsidiaries and affiliates.

RISK RATINGS

FELLER RATE CLASIFICADORA DE RIESGO LTDA.: AAFITCH CHILE CLASIFICADORA DE RIESGO LTDA.: AA-

DISTRIBUTABLE INCOME

In accordance with company definitions, distributable earnings correspond to total comprehensive profit - as reported in the Consolidated Comprehensive Income Statement - less profits on the revaluation of available-for-sale financial assets, net of applicable taxes - which are also indicated on the aforementioned Comprehensive Income Statement. The resulting earnings are multiplied by the percentage attributable to the owners of the parent company.

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DIVIDEND POLICY

The dividend policy is established at the Ordinary Shareholders’ Meeting. The corporation established a dividend policy of the distribution of at least 30% of company profits.

DIVIDENDS PAID

In 2016, the company paid a dividend of Ch$ 44,092.9 million, or 350.9 Chilean pesos per share. In the last three years, dividends per share were paid as follows:

2013 Ch$ 227 per share2014 Ch$ 185 per share2015 Ch$ 397 per share

SHARE MOVEMENTS AND STOCK MARKET BEHAVIOR

Company shares are not traded on any national and/or international stock market.

COMPANY SHARE TRANSACTIONS

The following company shares were traded in 2016. On June 29, 2016, International Finance Corporation (“IFC”) and Calverton Spain S.L. (“Calverton”), which belongs to the FIG Fund, which is managed by the IFC Asset Management Company, became shareholders of Consorcio Financiero S.A. by subscribing and paying for 11,281,063 shares, which were issued under the capital increase agreed by the Company at an Extraordinary Shareholders’ Meeting held on June 11, 2016, and the remaining shareholders had waived and assigned their corresponding preferential rights. The subscription price was Ch$ 8,313.33 per share, settled by a cash payment of Ch$ 93,783,200,000, equivalent to US$ 140,000,000 at the observed exchange rate published on June 24, as agreed in the contract dated May 27, 2016. IFC subscribed 8,057,902 shares, by paying Ch$ 66,988,000,000, and Calverton subscribed 3,223,161 shares, by paying Ch$ 26,795,200,000, so that when the period set by the Extraordinary Shareholders’ Meeting expires, this was the number of subscribed and paid shares.

MATERIAL EVENTS FOR 2016Consorcio Financiero S.A.

• On September 28, 2016, Consorcio Financiero S.A. informed the Chilean Securities and Insurance Supervisor that the International Finance Corporation and Calverton Spain S.L. have met the deadline set by the Extraordinary Shareholders’ Meeting held on June 11,


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55

2016 and have subscribed and paid for a total of 11,281,063 shares, pursuant to the first paragraph of article 24 of Corporate Law. Therefore, the company’s share capital is now Ch$ 288,141,592,306 divided into 136,952,063 shares, all fully subscribed and paid by the shareholders prior to this date.

In compliance with Article 56 of the Regulations governing Corporations, a Board meeting on this date agreed to record this event in a public deed, which was recorded in the margins of the Company’s registration in the Trade Register of the Santiago Property Register.

• On July 27, 2016, the company informed the Chilean Securities and Insurance Supervisor that in a Board meeting on the same date, the Board was informed of resignations from the position of Director submitted by Mr. Juan Diego del Rio Montt and Mr. Pedro Felipe Iñiguez Ducci, dated July 26, 2016.

To fill the empty chairs on the Board, Ramiro Mendoza Zúñiga and Sergio Restrepo Isaza were unanimously elected as Directors by all parties present. The recently appointed Directors will fulfill their duties until the next Ordinary Shareholders’ Meeting, at which time a new Board will be elected, in accordance with the second paragraph of Article 32 of Law 18.046 on Corporations.

Consequently, until the next Ordinary Shareholders’ Meeting, the Board of Directors will be made up of Marcos Büchi Buc, Chairman; Hernán Büchi Buc, José Antonio Garcés Silva; Eduardo Fernández León; Juan Hurtado Vicuña; Pedro Hurtado Vicuña; Juan José Mac-Auliffe Granello; Ramiro Mendoza Zúñiga and Sergio Restrepo Isaza.

• On July 15, 2016, the Chilean Securities and Insurance Supervisor was informed that in an Extraordinary Shareholders’ Meeting of the subsidiary Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., dated June 7, 2016, it was agreed to increase the share capital by Ch$ 55,000,000,000 by issuing 20,213,157 new single series shares at a price of Ch$ 2,720.99999025. On this same date, Consorcio Financiero S.A. subscribed and paid Ch$ 47,000,001,534 for 17,273,063 shares during the preferential subscription period.

• On July 14, 2016, the Chilean Securities and Insurance Supervisor was informed that an Extraordinary Shareholders’ Meeting of the Consorcio Financiero S.A. subsidiary, Banco Consorcio S.A., was held on the same date and representatives of all shareholders were present. The meeting unanimously agreed to increase its share capital by Ch$ 47,000 million by issuing 22,523 shares, and on the same date these shares were fully subscribed and paid for by Consorcio Financiero S.A.

• On July 13, 2016, the Chilean Securities and Insurance Supervisor was notified that the Company exercised its legal preferential right on July 12 to subscribe to 296,090,278 shares in ALMENDRAL S.A., which is part of a controlling agreement, and paid Ch$10,836,904,175. This subscription represents the Company’s entire preferential right.

The share capital increase at Almendral S.A. was approved at an Extraordinary Shareholders’ Meeting held on May 20, 2016, and recorded in a public deed with the same date, at the Santiago Notary Mr. Patricio Raby Benavente. This meeting agreed to increase the share capital of that company by up to Ch$ 175,000 million by issuing up to 4,700 million shares, which was approved by the Chilean Securities and Insurance Supervisor.

Furthermore, notwithstanding the Company’s habitual transactions policy, it was reported that on the same date, the Company completed the following transactions with subsidiaries, in order to reassign its investment assets: (1) Sale to Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. 193,659,000 shares in Almendral S.A. for Ch$ 7,843,189,500 through a sale arranged by the Santiago Stock Exchange, and (2) Sale to CN Life Compañía de Seguros de Vida S.A. 102,431,278 shares in Almendral S.A. for Ch$ 4,148,466,759 through a sale arranged by the Santiago Stock Exchange.

• On June 30, 2016, complementing the information reported in the Material Events dated March 31, May 27, and June 14, all of 2016, the Chilean Securities and Insurance Supervisor was informed of the following:

1. On June 29, 2016, International Finance Corporation (“IFC”) and Calverton Spain S.L. (“Calverton”), which belongs to the FIG Fund, a private fund managed by the IFC Asset Management Company, became shareholders of Consorcio Financiero S.A. by subscribing and paying for 11,281,063 shares, which were issued under the capital increase agreed by the Company at an Extraordinary Shareholders’ Meeting held on June 11, 2016, and the remaining shareholders had waived and assigned their corresponding preferential rights.

2. The subscription price was Ch$ 8,313.33 per share, settled by a cash payment of Ch$ 93,783.2 million, equivalent to US$ 140 million at the observed exchange rate published on June 24, as agreed in the contract dated May 27, 2016.

3. IFC subscribed 8,057,902 shares, by paying Ch$ 66,988 million, and Calverton subscribed 3,223,161 shares, by paying Ch$ 26,795.2 million, so that when the period set by the shareholders expires, this shall be the number of subscribed and paid shares.

4. These funds will be used to subscribe and pay for capital increases in Consorcio Financiero S.A.’s two main subsidiaries, which are Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. and Banco Consorcio, which should be completed during the next 60 days.

5. As a result of these share subscriptions, the shareholders of Consorcio Financiero S.A. as of this date are the following:

SHARES %

Banvida S.A. 57,551,628 42.02%

P&S S.A. 57,551,628 42.02%

IFC and Calverton 11,281,063 8.24%

BP S.A. 7,677,553 5.61%

FIP El Bosque and FIP Tobalaba 2,890,191 2.11%

TOTAL 136,952,063 100.00%

• On June 28, 2016, the Chilean Securities and Insurance Supervisor was informed that on June 23, Consorcio Financiero S.A. signed a contract commitment and forward contract with its subsidiary Banco Consorcio for US$ 140 million to be settled on June 29, 2016. The purpose is to make available the necessary funds so that the International Finance Corporation and Calverton Spain S.L. can purchase shares in Consorcio, through its capital increase and under the terms indicated in the contracts signed to that effect that were duly reported to the market and the Supervisor.

• On June 20, 2016, the Chilean Securities and Insurance Supervisor was informed that the Board unanimously agreed to appoint Mr. Marcos Buchi Buc as Chairman of the Board. Accordingly, the Company’s Board of Directors is composed of Messrs. Marcos Buchi Buc, Chairman, Hernán Büchi Buc, Eduardo Fernández León, José Antonio Garcés Silva, Juan Hurtado Vicuña, Pedro Hurtado Vicuna, Juan José Mac Auliffe Granello, Juan Diego del Rio Montt and Pedro Felipe Iñiguez Ducci.

• On June 14, 2016, complementing the information notified through the Material Event sent on May 27, 2016, the Company informed that an Extraordinary Shareholders’ Meeting was held on June 11, 2016 at 10:00 am. All the shareholders entitled to vote attended this

56


CHAP

.

meeting. In this Extraordinary Shareholders’ Meeting, the following was agreed:

(i) Increase the share capital by Ch$ 109,999,995,674, through issuance of 13,231,761 new shares at a unit price of Ch$ 8,313.33.

(ii) Begin a period for the Company’s current shareholders to decide whether to exercise their preferential rights to these shares, in accordance with article 25 of Corporation Law and its corresponding Regulations.

(iii) Empower the Board to make the necessary arrangements to issue these shares under the terms established by the meeting.

(iv) Increase the number of Company Directors from 7 to 9. (v) Revoke the current Board and appoint new members as follows:

- Marcos Büchi Buc.- Hernán Büchi Buc.- Eduardo Fernández León.- José Antonio Garcés Silva.- Juan Hurtado Vicuña.- Pedro Hurtado Vicuña.- Juan José Mac Auliffe Granello.- Juan Diego del Río Montt. - Pedro Felipe Iñiguez Ducci.

(vi) Amend the Fifth, Seventh and First Transitional Articles of the bylaws, in order to reflect this increase in share capital and number of directors, indicated above.

• The Chilean Securities and Insurance Supervisor was informed of the following on May 27, 2016:- On this same date, the Company and its shareholders P&S

S.A., Banvida S.A. and BP S.A., signed final agreements with International Finance Corporation and Calverton Spain S.L (collectively “IFC”), which complete the process whereby IFC becomes shareholder in Consorcio through a capital increase; and

- Subject to signing these contracts with IFC, an Extraordinary Shareholders’ Meeting was convened for June 11, 2016, at the Company’s registered address, at Avenida El Bosque Sur 180, Floor 3. Its purpose was to approve a proposal to increase the

57

share capital by Ch$ 110 billion and increase the number of Directors to nine. The Company has received confirmation that all the shareholders intend to attend this meeting and vote in favor of the proposal. The shareholders of Consorcio have also confirmed their intention to waive and assign their preferential subscription rights, to allow IFC to subscribe these new shares.

The contracts referred to set out the detailed conditions for IFC’s subscription and payment of the share capital increase equivalent to US$ 40 million, at a price per share of Ch$ 8,313.33, which represents 1.5 times book value as of December 31, 2015, adjusted for dividends. As a result of this subscription, IFC will acquire approximately 8.5% of the Company after the capital increase.

Furthermore, IFC and the Company shareholders indicated above have signed an agreement that will allow IFC to elect a Director, who will also become a member of the audit committee, and will also establish other rights as minority shareholders.

The funds received under this capital increase will be used to subscribe and pay for capital increases of US$ 70 million in the Company’s two main subsidiaries, which are Consorcio Seguros de Vida and Banco Consorcio, to enable them to continue with their plans to develop, strengthening the growth of their businesses.

The capital increase under the terms in these contracts is subject to compliance with the usual conditions for such transactions and we expect that subscription and payment will take place within the next 60 days.

• On April 27, 2016, the Securities and Insurance Superintendent was informed that the Company held an Ordinary Shareholders’ Meeting on April 26, 2016, attended by all voting shareholders, who unanimously agreed the following: - Approve the balance sheet, financial statements and the external

auditors’ report for 2015.- Approve the dividend policy for 2016.- Distribute a final dividend of Ch$350.86 per share, paid from

net income for 2015. This dividend will be paid on May 06, 2016, to shareholders who were recorded in the shareholders register on the fifth working day prior to this date.

- Approve the Board remuneration policy for 2016. - Appoint Pricewaterhouse Coopers Consultores, Auditores y

Compañía Limitada as external auditors for 2016. Approve the operational report with related parties for 2015. - Select the newspaper “El Diario Financiero” to publish

notices regarding shareholders’ meetings and other official announcements.

- Appoint Feller Rate Clasificadora de Riesgo Limitada and Fitch Chile Clasificadora de Riesgo Limitada as raters of publicly offered securities issued by the Company.

58


CHAP

.

• On March 31, 2016, it was reported to the Chilean Securities and Insurance Supervisor that a Board Meeting of the Company was held on March 30, 2016, where the Board, together with the controlling shareholders P&S S.A. and Banvida S.A. agreed to the fundamental aspects of the “Term Sheet for IFC Financial Institutions Growth, LP Proposed Equity Investment” (“Indicative Agreement”) with the International Finance Corporation and IFC Financial Institutions Growth Fund, LP (jointly “IFC”).

This agreement sets out the general terms and conditions of the proposal made by IFC, to subscribe and pay for a capital increase in the Company of US$ 140 million at a price per share equal to 1.5 times book value, which will allow IFC to acquire 8.3% of Company property after capital increase.

This capital increase will be mainly used to subscribe and pay for capital increases of US$ 70 million in each of Consorcio Financiero S.A.’s principal subsidiaries -Consorcio Seguros de Vida and Banco Consorcio- to enable them to continue with their plans to develop, strengthen and grow their businesses.

Furthermore, IFC and the Company shareholders indicated above will sign an agreement that will allow IFC to elect a Director, who will also become a member of the audit committee, as well as establishing other rights as minority shareholders. In addition, Consorcio Financiero S.A. and its subsidiaries will promote compliance with IFC social and environmental policies.

International Finance Corporation, part of the World Bank Group, is the principal international development institution that focuses its work on promoting the private sector. IFC is made up of over 180 member states and is internationally recognized as an entity with high international standards on corporate governance, transparency, best practices and environmental protection.

The completion of the transaction under the terms of this Indicative Agreement is subject to the usual regulatory and company approvals for such transactions, and the approvals required for IFC and the Agreement, and execution of the transaction documents in terms satisfactory to the parties, which we believe will take approximately ninety days.

59

CORPORATESTRUCTURE

60

CONSORCIO FINANCIERO S.A.

BANVIDA S.A.

LVCC ASSETMANAGEMENT S.A. CF. CAYMAN

CONSORCIO INVERSIONES

FINANCIERAS SpA

COMPAÑÍA DE SEGUROS DE VIDA CONSORCIO

NACIONAL DE SEGUROS S.A.

PUNTA PITE

C.F. INVERSIONES PERÚ SAC

LA POSITIVA VIDA SEGUROS Y

REASEGUROS

COMPASS GROUP HOLDINGS S.A.

LARRAINVIAL ASSET MANAGEMENT

ADMINISTRADORA GENERAL DE FONDOS S.A.

CN LIFE COMPAÑÍA DE SEGUROS DE

VIDA S.A.

INVERSIONES CONTINENTAL BIO

BIO SpA

P&S S.A. BP S.A.

42.02% 42.02%

25.00%

99.99%

0.0001%

100%99.99%

0.01%

15.20%

99.90%

50%

50%

15%99.99%

40.1%

44.8% 16.72%

5.61%

0.01%

83.27%

61

INMOBILIARIALOTE 18 S.A.

CONSTRUCTORA E INMOBILIARIA

PRESIDENTE RIESCO

CONSORCIO SERVICIOS S.A.

CONSORCIO INVERSIONES DOS

LIMITADA

CONSORCIO TARJETA DE

CRÉDITO S.A.

BANCO CONSORCIO S.A.

CONSORCIO CORREDORES DE

BOLSA S.A.

CÍA. DE SEGUROS GENERALES CONSORCIO NACIONAL DE SEGUROS

S.A.

FIP EL BOSQUE FIP TOBALABA

99.99%

0.5%

0.01%

84.40%

84.40%

99.99%

99,99%

68.00%

99.99%

32.00% 0.01%

0.01%0.01%

0.01%

99.5%

99.99%

1.06% 5.88%1.06% 2.35%

INTERNACIONAL FINANCE

CORPORATIONCALVERTON SPAIN

SL.

CONSORCIO INVERSIONES

LIMITADA

100 YEARS OF SERVICEAND TRANSPARENCY

providing complete information and advice, developing the tools to help you protect

and plan for your future

62


04FINANCING,INVESTMENT AND RISk POLICY

INVESTMENT POLICYConsorcio Financiero S.A. is a leading financial services company focused on meeting its customers’ needs in terms of family prosperity and asset security through its subsidiaries. To do so, it constantly seeks out financial sector investments that complement these objectives and facilitate their achievement. Consorcio Financiero S.A. does not have any type of investment policy established in its bylaws.

FINANCING POLICYThe company obtains financial resources through the dividends perceived from subsidiary operations, capital contributions, bond issuance and/or bank loans. Consorcio Financiero S.A. does not have any type of financing policy established in its bylaws.

BONDSConsorcio Financiero S.A. currently has bonds issued at a value of UF 5,014,626, as of December 31, 2016.

CREDITOR BANKSAs of year-end 2016, Consorcio Financiero had financial debts with banks in the amount of Ch$ 53,880 million.

DEPENDENCE ON SUBSIDIARY DIVIDENDSConsorcio Financiero S.A. (CFSA) is the parent company of a corporate conglomerate; its revenue depends largely on the capacity of its subsidiaries to distribute dividends. CFSA controls more than 99% of each main subsidiary’s share capital, giving it the flexibility to establish dividend policies according to its needs; the subsidiaries’ growth plans; and the availability of their resources, taking into account that its subsidiaries are regulated companies that must comply with current regulations.

RISK FACTORSThe holding company is comprised of entities that offer services in the fields of insurance, pension funds, savings and banking, primarily through three insurance companies, a bank, a stock brokerage and, indirectly, a pension fund administrator. These entities are exposed to risks of varying nature, which are managed by specialist units within each entity. These units identify, assess, mitigate and control risks. They also produce reports that account for the nature, size and complexity of each business. All Consorcio Financiero S.A. subsidiaries have traditionally demonstrated sound solvency positions, with wide margins relative to regulatory requirements. Moreover, they benefit from the strong commitment of Consorcio Financiero’s shareholders, which is reflected in active and direct shareholder participation on the subsidiaries’ Boards of Directors and the Directors’ Committees of each entity.

The following is a list of the risks affecting the holding company’s main companies:

64

04 FINANCING, INVESTMENT AND RISK POLICY

CHAP

.

I. CONSORCIO FINANCIEROConsorcio Financiero S.A. is the parent company of a corporate conglomerate. As such, its revenue depends largely on the capacity of its subsidiaries to distribute dividends, as well as the dividends it receives from financial investments. Consorcio Financiero S.A. has the flexibility to establish the dividend policies of its subsidiaries according to its needs; the subsidiaries’ growth plans; and the availability of their resources, taking into account that its subsidiaries are regulated companies that must always comply with current regulations.

II. INSURANCE COMPANIESMARKET RISKThis is the risk of a downturn in the net value of assets and liabilities from movements in market factors, such as equity investment prices, interest rates, property assets and exchange rates.

Market risk is managed with a variety of tools, including: establishing and monitoring an Investment Policy that sets forth the main guidelines for the investment portfolio, listing limits by type of instrument, geographic distribution, economic activity and coverage ratios, among others. Market risk is primarily assessed by determining the Value at Risk (VaR) and applying stress tests to the most relevant risk factors. Life insurance companies also monitor matching of asset and liability flows, as well as the Asset Sufficiency Test.

CREDIT RISKCredit risk refers to potential breaches in commitments by a counterpart or securities issuer in the portfolio, or deterioration of a securities issuer’s or counterpart’s credit rating.

For issuer risk, the Credit and Deterioration Policy establishes internal limits based on external risk ratings and periodic studies by Consorcio companies. For reinsurance counterpart risk, a policy has been established to determine the general guidelines and minimum conditions –including reviewing the entities’ financial statements and credit ratings – for establishing a contractual relationship with a reinsurer. For derivative instruments and repurchase agreements, a Derivative Use Plan, which includes definitions regarding the credit quality of counterparts, has been established.

LIQUIDITY RISKThis is the risk of incurring losses due to the absence of sufficient liquid assets or sources of financing at a reasonable cost to meet payment commitments.

In order to deal with any deviation from budgeted cash flows, the companies generally ensure that asset and liability cash flows match, and that a significant portion of their portfolio is invested in highly

liquid, easily retired financial instruments. Furthermore, the companies have short-term credit lines available in the Chilean financial system, allowing them to efficiently and profitably manage liquidity positions.

TECHNICAL RISKSTechnical risks are inherent to the insurance business. They may originate in the process of subscribing and pricing policies that result in losses due to insufficient premiums or technical reserves, unfavorable budgeted pricing deviations, expiry, catastrophes, or reinsurance credit risk.

Technical risks are identified and limited through policies on subscription and pricing as well as periodically controlled, Board-approved reinsurance. Moreover, specific risk factors, such as mortality and disability are studied and researched. Various models for assessing technical risk have been developed. They include analysis of normal and catastrophic scenarios, the application of Liability Adequacy and Premium Sufficiency Tests and monitoring policy duration, among others.

OPERATIONAL AND TECHNOLOGICAL RISKSOperational and technological risk refers to the risk of loss due to failure or inadequacy of internal processes, people or systems, or as a result of external events. They can be caused by fraud, implementation errors, unreliable information, negligence, or catastrophic events such as fire or earthquake, etc.

Creating risk matrices, which includes drafting a detailed map of processes and sub processes, illustrates the various operational risks and identifies potential improvements to the internal control system. Management of these risks is supported by a series of policies as well as developing and monitoring procedures, operating manuals and continuity plans for those processes identified as critical.

LEGAL AND REGULATORY RISKThis is the risk arising from a breach in laws or regulations that govern the business activities of the companies. It also includes the risk of adverse regulatory changes.

Legal and regulatory risk is mitigated primarily through a Compliance Policy that defines the main compliance-related roles and responsibilities within the companies. Likewise, the risk management responsibilities of key areas are defined in the companies’ Corporate Governance Code.

STRATEGIC RISKSStrategic risks arise due to the absence of appropriate strategy, failure in design and/or implementation of coherent business plans, or inability to adapt to new environmental conditions. This risk category also includes the deterioration of market conditions and Group Risk, which refers to loss exposure resulting from belonging to the Consorcio Financiero holding.

65

66

The companies’ current Corporate Governance Structure allows these risks to be duly mitigated. The structure is based primarily on various Directors’ Committees, which serve as opportunities for the Board of Directors and Senior Management to discuss and analyze the companies’ key issues and matters. The Strategy Committee is responsible for monitoring compliance with strategy, along with a robust, thrice-yearly business planning process. Compliance is thoroughly analyzed at the monthly Board meeting.

III. BANCO CONSORCIO AND SUBSIDIARIESCREDIT RISKCredit risk refers to the risk of experiencing capital losses due to the breach of an obligation by a Bank debtor. This is the principal risk that affects financial institutions.

Banco Consorcio’s risk management and control model is characterized by adequate segregation of roles and responsibilities, with active participation by the Board of Directors and senior management. The Bank also has a credit risk policy that reflects the shareholders’ risk appetite and accounts for the different types of businesses and/or segments in which the entity is present: retail banking, including consumer credit, and corporate banking.

Each business segment is assessed in accordance with its characteristics. On one hand, the retail banking segment applies mass assessment systems and statistical credit scoring models, while the corporate segment uses an individual assessment process, in which senior management and directors are highly involved.

Additionally, the Bank mitigates credit risk by securing real and personal guarantees, as well as establishing maximum concentration limits by debtor, industry segment and company size.

For the purpose of anticipating possible future losses, the Bank has established a provision policy that seeks to duly reflect the expected loss levels for the credit portfolio. For retail banking, provisions are established on the basis of statistical models that estimate expected loss over a period of time. For corporate banking, provisions are established on the basis of an individual analysis of the company’s financial and payment capacity.

For financial instruments, the Bank uses internal assessments and autonomous, external risk ratings to measure the probability of not collecting from issuers. For derivative instruments, credit risk is limited to the fair value of contracts favorable to the Bank (active position)

plus potential risk, which is estimated as a percentage of the notional value of the contract and depends on the residual term of the contract.

LIQUIDITY RISKGiven the importance of prudent liquidity management in a banking institution, Banco Consorcio has approved and implemented a liquidity management policy for local and foreign currency. The policy is consistent with the fulfillments and obligations generated by the Bank’s operations, and is in accordance with current legal and regulatory requirements.

There are four conceptually distinct types of liquidity risk, risk related to: daily liquidity, funding or structural liquidity, trading liquidity and market liquidity. Each of these types of risk is actively managed through maximum deficit and stock levels, limits on mismatches and liquidity indicators, as appropriate. Each of these tools is monitored and controlled by management, as well as the Assets and Liabilities Committee, on which the directors participate.

Various tools are used to measure and monitor liquidity risk, distinguishing between normal market situations and stress scenarios. In normal scenarios, the Bank uses projected cash flows, concentration ratios for liability maturity by term and counterpart, in addition to liquidity ratios, which primarily indicate the bank’s relative position in terms of liquid assets and volatile liabilities. For stress scenarios, monthly tests are applied to assess the bank’s ability to fare extreme instances of illiquidity. Furthermore, early alert indicators are used to trigger Illiquidity Contingency Plans, if necessary.

MARKET RISKMarket risk management is one of the cornerstones of any financial institution. For traditional banking, assets and liabilities are not valued according to market value, but according to amortized cost. Risks arise as a result of possible mismatches, both in amount and term of balance sheet assets and liabilities. The following risks are especially relevant: interest rate risk, foreign currency risk and indexation risk.

For trading activities, risks primarily arise from market price variations that could negatively affect the value of the Bank’s financial instruments. Trading operations aim to take advantage of the arbitrage opportunities that result from the imbalance of market prices, taking positions or earning accrual income through the acquisition of fixed-income instruments. As such, the following risks are especially relevant: interest rate risk, foreign currency risk and indexation risk.

The Bank uses various methods to monitor and measure these risks. It applies the current regulatory measurements, particularly for interest rate and indexation risk for the banking book (C40) in short- and long-


CHAP

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67

term operations. It also applies measurements such as value at risk, interest rate sensitivity measurements, PV01 and maximum indexed currency exposure.

The Bank conducts stress testing to estimate losses in the face of extreme changes in the structure of interest rates and foreign currency parities. It also applies retrospective testing to assess the effectiveness of its internal value at risk model.

OPERATIONAL RISK.This is the risk that the Bank may suffer a loss in reputation with legal or regulatory implications, or incur financial losses, arising from system failures, human error, fraud or external events. The bank and its subsidiaries recognize that the elimination of all operational risks is impossible, but it has implemented a supervision and control framework to mitigate these risks. The controls include effective segregation of duties, access restrictions, authorization

SUBSIDIARIES, AFILIATES AND INVESTMENTS IN OTHER COMPANIES

ITEMIzATION

LEGALNATURE

LINE OFBUSINESS

SUBSCRIBEd ANd PAId-IN

CAPITAL

OWNERShIP By PARENTOR RELATEd COMPANy

ANNUALChANGE IN OWNERShIP By PARENTOR RELATEd COMPANy

BUSINESS LINE ChILEAN Id (RUT) ThCh$CURRENT % OWNERShIP By PARENT

CURRENT % OWNERShIP By RELATEd COMPANy

TOTALChANGE IN OWNERShIP By PARENT

ChANGE IN OWNERShIP By RELATEd COMPANy

Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A.

99.012.000-5 Private Corporation Life Insurance Policies 166,185,019 99.90% 0.00% 99.90% 0.03% 0.00%

CN Life Compañía de Seguros de Vida S.A. 96.579.280-5 Private

Corporation Life Insurance Policies 53,644,951 16.72% 83.28% 100.00% 0.00% 0.00%Banco Consorcio and Subsidiaries 99.500.410-0 Private

Corporation Bank 356,571,629 67.80% 32.20% 100.00% 4.30% (4.30%)Compañía de Seguros Generales Consorcio Nacional de Seguros S.A.

96.654.180-6 Private Corporation General Insurance Policies 13,548,584 99.99% 0.01% 100.00% 0.00% 0.00%

CF Cayman Foreign Limited Liability Company

Development and operation of investments as well as real estate and transferable securities operations

6,607,528 99.99% 0.01% 100.00% 0.00% 0.00%

CF Inversiones Perú S.A.C. Foreign Private

Corporation

Development and operation of investments as well as real estate and transferable securities operations

35,696,584 99.99% 0.01% 100.00% 0.00% 0.00%

Consorcio Inversiones Financieras SpA 76.155.778-5 Joint Stock

CompanyInvestment company and investor in transferable securities in general

2,032 100.00% 0.00% 100.00% 0.00% 0.00%

Consorcio Servicios S.A. 96.989.590-0 Private Corporation

Economic, financial, management and administrative advisory services, commercial inf., collection services

269 99.50% 0.50% 100.00% 0.00% 0.00%

Consorcio Inversiones Limitada 96.983.020-5 Limited Liability


77,777,985 99.99% 0.01% 100.00% 0.00% 0.00%

Consorcio Inversiones Dos Ltda. 78.008.540-5 Limited Liability


79,874,168 99.99% 0.01% 100.00% 0.00% 0.00%

Inmobiliaria Punta Pite S.A. 99.525.220-1 Private

CorporationPurchasing, sale and lease of owned or rented property

467,565 0.00% 100.0% 100.00% 0.00% 0.00%

Inmobiliaria Lote 18 S.A. 76.098.056-0 Private

CorporationPurchasing, sale and lease of owned or rented property

963,810 0.00% 84.40% 84.40% 0.00% 0.00%

Constructora e Inmobiliaria Presidente Riesco S.A.

76.493.376-1 Private Corporation

Investment company and investor in transferable securities in general

34,572 0.00% 84.40% 84.40% 0.00% 0.00%

LVCC Asset Management S.A. 76.069.369-3 Private

CorporationInvestment company and investor in transferable securities in general

1,713,455 25.00% 0.00% 25.00% 0.00% 0.00%

Inversiones Continental Bio-Bio SpA

76.515.767-6 Joint Stock Company

purchasing, sale and lease of owned or rented property

1,003,500 0.00% 60.00% 60.00% 0.00% 60.00%

procedures, reconciliations, training, personnel evaluation, and internal audit, whilst adopting best practices and involving all units within the bank. Notwithstanding the aforementioned, Banco Consorcio and subsidiaries have an inherent and residual risk assessment built into their operational and technological processes, in order to mitigate with action plans those that are above the accepted risk threshold. They also have operational and technological contingency plans for their activities defined as critical, which are tested periodically. They also have a management and control model for all critical information assets. This ensures that there is management and analysis of all detected nonconformities and registered loss events, as well as plans to correct their causes. Monitoring, control and management is conducted with suppliers defined as critical through periodical visits and control of continuity plans, and compliance with existing information security policies is reviewed.

68

FIRST AND LAST NAMES OF DIRECTORS AND SENIOR MANAGERS

1. COMPAÑÍA dE SEGUROS dE vIdA CONSORCIO NACIONAL dE SEGUROS S.A.

ChAIRMAN ChILEAN TAx I.d. (RUT)Marcos Büchi Buc 99.012.000-5BOARd OF dIRECTORS ExECUTIvE COMMITTEE

Eduardo Fernández León Carlos Camposano González José Antonio Garcés Silva Marcela Cerón CerónJuan Hurtado Vicuña Francisco Goñi EspíldoraPedro Hurtado Vicuña Ricardo Ortúzar CruzJuan José Mac-Auliffe Granello Ricardo Ruiz KvapilFelipe Silva Méndez Luis Eduardo Salas NegroniChIEF ExECUTIvE OFFICER Renato Sepúlveda DíazFrancisco Javier García Holtz Raimundo Tagle Swett

Christian Unger VergaraGuillermo José Valenzuela Brito

2. CN LIFE COMPAÑÍA dE SEGUROS dE vIdA S.A.




3. COMPAÑÍA dE SEGUROS GENERALES CONSORCIO NACIONAL dE SEGUROS S.A.





CHAP

.

69

4. BANCO CONSORCIO

ChAIRMAN ChILEAN TAx I.d. (RUT)Patricio Parodi Gil 99.500.410-0BOARd OF dIRECTORS ExECUTIvE COMMITTEE

Cristián Arnolds Reyes Fernando Agüero AguirreRichard Büchi Buc Mara Judith Forer LagolnitzerCristián Cox Vial Gonzalo Gotelli MarambioJosé Antonio Garcés Silva Jessica Hernández VillegasJulio Guzmán Herrera Álvaro Larraín Prieto Pedro Hurtado Vicuña José Luis Miño VallsAna María Rivera Tavolara Ramiro Méndez MontesJosé Miguel Ureta Cardoen Francisco Nitsche CasadoChIEF ExECUTIvE OFFICER Jaime Riquelme BravoFrancisco Ignacio Ossa Guzmán Andrea Rodríguez Abásolo

Francisco Pérez OjedaGonzalo Van Wersch M.

5. CONSORCIO CORREdORES dE BOLSA S.A.

ChAIRMAN ChILEAN TAx I.d. (RUT)Marcela Cerón Cerón 96.772.490-4BOARd OF dIRECTORS

Andrea Godoy FierroGonzalo Gotelli MarambioRamiro Méndez MontesRaimundo Tagle SwettChIEF ExECUTIvE OFFICERFrancisco Pérez Ojeda

7. LvCC ASSET MANAGEMENT S.A.

ChAIRMAN ChILEAN TAx I.d. (RUT)Fernando Larraín Cruzat 76.069.369-3BOARd OF dIRECTORS

Leonidas Vial EcheverríaJuan Luis Correa GandarillasPatricio Parodi GilFrancisco Javier García HoltzChIEF ExECUTIvE OFFICERJuan Luis Correa Gandarillas

6. CONSORCIO TARjETAS dE CRÉdITO S.A.

ChAIRMAN: RUT (ChILEAN TAx Id):Patricio Parodi Gil 99.555.660-KBOARd OF dIRECTORS:

Francisco Ignacio Ossa GuzmánRichard Büchi BucCristián Cox VialJosé Antonio Garcés SilvaJulio Guzmán HerreraPedro Hurtado VicuñaAna María Rivera TavolaraJosé Miguel Ureta CardoenChIEF ExECUTIvE OFFICERFrancisco Ignacio Ossa Guzmán

11. LA POSITIvA vIdA SEGUROS y REASEGUROS S.A. (PERÚ)

ChAIRMAN: NATIONAL Id (RUC)Juan Manuel Peña Roca N° 20454073143vICE ChAIRMAN:

Manuel Bustamante OlivaresBOARd OF dIRECTORS:

Marcos Büchi BucOscar Espinoza BedoyaFrancisco Javier García HoltzJavier Kutsuma NodaJuan Manuel Peña HendersonRaimundo Tagle SwettChristian Unger VergaraAndreas Von Wedemeyer KniggeChIEF ExECUTIvE OFFICERJuan Manuel Peña Henderson

8. LARRAIN vIAL ASSET MANAGEMENT AdMINISTRAdORA GENERAL dE FONdOS S.A.

ChAIRMAN ChILEAN TAx I.d. (RUT)Fernando Barros Tocornal 96.955.500-KBOARd OF dIRECTORS

Pablo Castillo PradoJuan Luis Correa GandarillasFrancisco Javier García Holtz Fernando Larraín CruzatSantiago Larraín CruzatAntonio Recabarren MedeirosEduardo Walker HitschfeldChIEF ExECUTIvE OFFICERLadislao Larraín Vergara

9. FUNdACIÓN CONSORCIO NACIONAL vIdA

ChAIRMAN ChILEAN TAx I.d. (RUT)Francisco Javier García Holtz 99.500.410-0BOARd OF dIRECTORS

Fernando Agüero AguirreFrancisco Goñi EspíldoraVerónica Ruz PascualLuis Eduardo Salas NegroniRaimundo Tagle SwettChIEF ExECUTIvE OFFICERIsabel Margarita Romero Muñoz

10. CF INvERSIONES PERÚ S.A.C.

ChIEF ExECUTIvE OFFICER NATIONAL Id (RUC)Jorge F. Carlos Harten Costa 99.500.410-0

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05ECONOMICAND FINANCIAL ENVIRONMENT

INTERNATIONAL SCENARIO2016 started out with high levels of uncertainty regarding growth in China, and therefore regarding their demand for raw materials and fossil fuels. This uncertainty led to a fall in the raw materials index and fossil fuels index, resulting in the record lows of the last 15 and 10 years, respectively. At the same time, stock indexes fell 10% in one week, pressured by raw materials companies and banks, which fell up to 20% due to the uncertainty of their exposure to mine and fossil fuel extractors. But these fears dissipated once banks showed that their exposure was not so high, once the OPEC made progress on an agreement to cut production, and once China showed reassuring data. By mid-year, the primary US stock indicators reached record highs.

The second half of 2016 was marked by political uncertainty, first through the Brexit referendum in Great Britain to leave the European Union, and then through the US presidential elections.

In both cases, the paradox was that the market was already falling before these events occurred, due to the uncertainty generated by the possibility of what was considered to be a negative scenario: that the vote to leave the European Union would win and that Donald Trump would be elected president. However, when both events occurred, the market bounced back in both cases.

In terms of the election of Donald Trump, the recovery of stock indexes, raw materials and fossil fuels was swift and massive, mostly justified by the fulfillment of campaign promises: significant tax decreases, less regulation (especially in the finance sector) and a major infrastructure investment plan. This is all seen in a very positive light by the market, not considering that the measures will bring back inflation (which raised the US Treasury rates), create jobs and increase economic growth. By the end of the year, stock indexes and raw material finished with values that incorporate a very positive macroeconomic scenario.

Despite the global context and high volatility, Consorcio Financiero S.A. had a profit of Ch$ 137,161 million, which represented a 56% increase over the previous year, ending with a consolidated equity of Ch$ 910,664 million.

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05 ECONOMIC AND FINANCIAL ENVIRONMENT

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SPREAD LATAM CORPORATE BONDS

FIXED INCOMEEND OF US EXPANSIVE CURRENCY POLICY

Diverse factors influenced the high market volatility in 2016, mainly with political origins such as Brexit and the US elections. This is joined by the increase in US FED rates, putting an end to the long years of strong currency stimulus in the US market that have existed since the subprime crisis.

For Latin American issuers, it was a good year, despite the poor start seen in raw materials in general, and the return of Argentine papers, as well as Brazilian issuers, after the corruption scandals and the dismissal of its president.

LOCAL MARKET

In the local market, once again it was a year with little bonds issued, although marked by historically low levels of base rates. At the end of the year, the Chilean Central Bank changed the bias, indicating the beginning of a new phase of monetary expansion for 2017.

Source: Bloomberg

Source: BofA ML HG America EM Corporate Plus, Bloomberg

CONSORCIO INSURANCE MANAGEMENT

In the fixed income market, during 2016, insurance companies mainly invested in the foreign market, due to arbitration of rates between the local market and the international market. At the beginning of the year, 46% of fixed income was in bonds issued outside Chile. By the end of 2016 this percentage reached 52%.

In 2016, Consorcio bought US$ 540 million in bonds issued outside Chile, of which approximately 70% was in internationally issued bonds and 30% in domestic bonds. Specifically, it took advantage of the volatility generated by political events and in the commodities sector to invest in bonds with high credit quality.

Regarding exchange rate hedging of the portfolio denominated in foreign currency, the Company used opportunities to cover cash flows up to the maturity of the papers through Cross Currency Swap in the amount of US$ 408 million. Thanks to arbitrage in the rate market, historically attractive UF accrual levels and a better currency ratio between assets and liabilities were obtained.

In the local market, the Company took opportunities to invest through private loans to national companies with good credit ratings, along with the completion of contributions committed in syndicated loans.

VARIABLE INCOMEEMERGING MARKETS RECOVER

2016 closed with a positive balance for variable income markets, primarily due to the strong performance of emerging market economies and solid performance of developed markets, showing positive corporate results, especially in United States.

On a regional level, Brazil lead the increases with 78.24%, followed by Peru with 56.80% and Argentina with 21.65%. The exception was the Mexican stock exchange, which fell 8.85% given the results of the US elections and the protectionist discourse of new president elect.

In Chile, despite the poor performance of the electrical sector following the last electricity tender process in which the incumbents were the big losers at the hands of new ERNC projects and the uncertainty in utilities after the Chamber of Deputies approved a modification to the law that regulates the profitability of health services, the IPSA registered 22.61% measured in dollars.

CONSORCIO INSURANCE MANAGEMENT

Consorcio’s consolidated exposure in local variable income was 5.00% of the company’s total portfolio in 2016, which implied a negligible drop over the previous year. On an international level, it rose from 4.04% to 4.10%.

ALTERNATIVE ASSETS:PROGRAM IN CONSTANT MATURITY AND GROWTH

The alternative assets program has continued its growth for Consorcio Seguros Vida and CN Life Seguros Vida. For the third year in a row, 2016 showed positive profitability, mitigating the effect of the entry of new funds into the portfolios of both companies. The program reached a maturity that enabled it to leave the famous “J-curve” behind.

During the year, the company signed 10 new commitments. A total of US$ 111 million in pledges were signed between the two companies (US$ 98 million Consorcio Seguros Vida and US$ 12 million CN Life Seguros Vida) in buyout, secondary, private debt strategies, etc. These commitments included five new relationships with the highest level of agents within the world of alternative assets.

This year, like 2015, pledges were also signed with sectoral funds to buy in on market opportunities in these sectors. Two commitments to Europe-focused debt funds were sealed, given Consorcio’s conviction that the new regulation of European banks and increased capital requirements opened up a space for such funds to take advantage of this type of assets. Of the other commitments, four were in the funds of agents with which Consorcio has a previous relationship.

At the close of 2016, both insurance companies have signed pledges for over US$ 550 million, US$ 348 million of which have been disbursed. The current program exposure is 3.8% of the portfolio, nearing the target of 5%.

300

US$M NAV PRIVATE EQUITY

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2013 2014 2015 2016

0

EXPOSURE IN ALTERNATIVE ASSETS

Source: GfK Adimark – Territorial Studies Area

PROPERTY INVESTMENTSHOUSING MARKET

Despite the strong drop in sales, 2016 closed with better results than expected, considering that 2015 was an atypical year and anticipated much of the demand from 2016 to 2018.

Other factors that also affected demand were the higher restrictions on the granting of bank loans, labor reform and high property prices. In this context, the sales level reached 34 thousand units for Greater Santiago, which represents a 37% drop in the level of units sold in 2015 and is equivalent to the sales level registered in 2011.

The decrease in sales occurred in both the end user market (people) and the investor market, with the latter strongly affecting “blank” sales.

QUARTELY SALES IN GREATER SANTIAGOUNITS - (MARCH 2010 - DECEMBER 2016)

Despite the above, in general the 34 thousand units in stock raised by AGF Adimark in the housing market in Greater Santiago, give a perception of a “healthy” market, considering that the months to exhaust stock are around 15,3 months and the price trend over the last period has stabilized in UF/m² and even shown marginal growth in some sectors. However, there is a rebound in standing stock, rising from 2% at the end of 2015 to 8% by the end of 2016, which could imply that prices may be affecting some secondary markets.

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05 ECONOMIC AND FINANCIAL ENVIRONMENT

CHAP

.

First Second Third Fourth


Source: Research, CBRE

Compared to the previous years, the industry has assimilated the decrease in activity and, consequently, the incorporation of new projects has been adjusted downward, meaning no considerable increase in supply.

The incorporation of new projects has also been affected by land prices, which remain at historically high levels, and by regulatory constraints and the high costs and uncertainty involved in obtaining new permits.

In 2017, demand is expected to be marginally better than 2016, but will depend on the country’s macroeconomic conditions and people’s expectations for the future, considering that it is an election year.

OFFICE MARKET

The A + B class office market in the Metropolitan Region ended 2016 with a stock of more than 4.5 million square meters, representing an increase of 4.7% over the previous year. In terms of asset class, class A ended with a stock of more than 2.2 million square meters, representing growth of 0.9% per annum, and class B ended with 2.3 million square meters, equivalent to an annual increase of 7.5%, mainly in the districts of Providencia, Vitacura, Huechuraba and Las Condes.

2016 was the first year since 2012 when vacancy did not continue to increase. In fact, it went marginally downward, from 9.9% to 9.7% (A + B), mainly due to the non-incorporation of new class A projects, since the Class A market vacancy went down from 9.2% to 7%, but class B rose in the market from 10.5% to 12.3%.

In terms of prices, aggregate A + B markets were adjusted downwards from 2015, from 0.50 UF/m² to 0.48 UF/m². This is mainly explained by the decline in the Class A market, which decreased from 0.54 UF/m² to 0.52 UF/m², and a marginal decline in the Class B market, from 0.45 UF/m² to 0, 44 UF/m².

75

From a trading point of view, the year was strongly influenced by major closures at the end of the period (mainly in the fourth quarter). Price drops in the Class A market motivated tenants in Class B buildings to switch to better facilities, as well as a marked interest in furnished offices versus empty spaces, which meant additional investments for real estate lessors to adapt to these new market requirements.

It is estimated that lease prices will stay the same or increase in 2017, since production has been on the decline and has come to match and even drop lower than market absorption, which would remove downward pressure. However, like the housing market, it will depend on the country’s macroeconomic conditions and expectations for the coming years.

The company’s portfolio has continued to grow in line with the company’s assets, both in new loans (real estate financing), taking advantage of the potential long-term structures, and in new asset purchases of offices and business rentals, as well as the entry of new national and foreign real estate funds. The results obtained during the year were in line with initial projections and we expect that in 2017, the portfolio performance will be similar to the last few years.

New Offer Class A+B (m2) Absorption Class A+B (m2) vacancy Class A+B (%) Unemployment (%) GdP (%)

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76


06BUSINESSMANAGEMENT

79

101

121

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6.1 INSURANCE/ PENSION

6.2 BANCO CONSORCIO

6.3 LVCC ASSET MANAGEMENT

6.4 LA POSITIVA VIDA SEGUROS Y REASEGUROS S.A.


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6.1 INSURANCE/ PENSION

CONSORCIO SEGUROS BOARD OF DIRECTORS

CONSORCIO SEGUROS EXECUTIVE COMMITTEE

MISSION, VISION AND VALUES

CUSTOMER MANAGEMENT

CONSORCIO SEGUROS BUSINESS PERFORMANCE

• CONSORCIO SEGUROS VIDA

• CN LIFE SEGUROS VIDA

• CONSORCIO SEGUROS GENERALES

HUMAN CAPITAL

79

06 CHAP

.

BUSINESS MANAGEMENT

BOARD OF DIRECTORSCONSORCIO SEGUROS

EDUARDO FERNÁNDEZ LEÓNDIRECTOR

Chilean Tax ID 3.931.817-2Business Administration DegreePontificia Universidad Católica de ChileOn board of directors since: 09/29/1999

JUAN HURTADO VICUÑADIRECTOR

Chilean Tax ID 5.715.251-6Civil EngineerUniversidad de ChileOn board of directors since: 09/29/1999

JOSÉ ANTONIO GARCÉS SILVADIRECTOR

Chilean Tax ID 3.984.154-1BusinessmanOn board of directors since: 09/29/1999

80

06 BUSINESS MANAGEMENT / 6.1 INSURANCE/ PENSION

CHAP

.


PEDRO HURTADO VICUÑADIRECTOR

Chilean Tax ID 6.375.828-0Industrial Engineer

Universidad de ChileOn board of directors since: 28/04/2011

FELIPE SILVA MÉNDEZDIRECTOR

Chilean Tax ID 15.312.401-9Business Administration Degree

Pontificia Universidad Católica de ChileMaster’s Degree in Business Administration

University of Chicago On board of directors since: 27/04/2016

JUAN JOSÉ MAC-AULIFFE GRANELLODIRECTOR

Chilean Tax ID 5.543.624-KBusiness Administration Degree

Pontificia Universidad Católica de ChileOn board of directors since: 09/29/1999

Chilean Tax ID 7.383.017-6Civil Structural Engineering

DegreeUniversidad de Chile

On board of directors since: 12/30/2014

81

MARCOS BÜCHI BUCCHAIRMAN

FRANCISCO JAVIER GOÑI ESPÍLDORAAUDITING MANAGER

Chilean ID (RUT): 8.173.825-4Industrial Civil EngineerUniversidad de ChileIn role since:02/01/2007

GUILLERMO VALENZUELA BRITOGENERAL COUNSEL

Chilean ID (RUT): 13.687.656-2AttorneyPontificia Universidad Católica de ChileMaster’s Degree in Law and EconomicsUniversity of UtrechtNetherlandsIn role since:02/01/2015

RICARDO RUIZ KVAPILOPERATIONS AND TECHNOLOGY MANAGER

Chilean ID (RUT): 9.974.319-0Computer Civil EngineerUniversidad de SantiagoIn role since:10/01/2012

RAIMUNDO TAGLESWETT MARKETING AND CUSTOMER SERVICES MANAGER

Chilean ID (RUT): 10.063.614-KBusiness Administration DegreePontificia Universidad Católica de ChileMaster’s Degree in Business AdministrationUniversidad Adolfo IbáñezIn role since:07/03/2012

LUIS EDUARDO SALAS NEGRONIPEOPLE MANAGER

Chilean ID (RUT): 9.704.080-KPsychologistUniversidad Diego PortalesIn role since:11/01/2005

82

EXECUTIVE COMMITTEECONSORCIO SEGUROS

RICARDO ORTÚZAR CRUZREAL ESTATE BUSINESS MANAGER

Chilean ID (RUT): 12.855.410-6Industrial Civil EngineerPontificia Universidad Católicade ChileIn role since:01/02/2012


CHAP

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MARCELA CERÓNCERÓNRISK CONTROL MANAGER

Chilean ID (RUT): 6.001.382-9Business Administration DegreePontificia Universidad Católica de ChileMaster’s Degree in Business AdministrationWharton SchoolUniversity of PennsylvaniaActuary, CEA, FranceIn role since: 01/02/2015

CARLOS CAMPOSANO GONZÁLEZCOMMERCIAL MANAGER

Chilean ID (RUT): 8.897.012-8Business Administration DegreeUniversidad de ConcepciónIn role since:07/03/2012

CHRISTIAN UNGER VERGARATECHNICAL AND FINANCIAL OVERSIGHT MANAGER

Chilean ID (RUT): 9.483.395-7Industrial Civil EngineerUniversidad de ChileIn role since:06/21/1996

RENATO SEPÚLVEDADÍAZINVESTMENT MANAGER

Chilean ID (RUT): 10.603.621-7Electrical Civil EngineerUniversidad de ChileMaster’s Degree in EconomicsUniversidad de ChileMaster’s Degree in Business AdministrationUniversity of ChicagoIn role since:01/02/2015

83

FRANCISCO JAVIER GARCÍA HOLTZCHIEF EXECUTIVE OFFICER, INSURANCE COMPANIES

Chilean ID (RUT): 8.967.957-5Business Administration DegreeUniversidad Diego PortalesIn role since:07/03/2012

VISIONTo be a leader in the insurance industry and a major player in savings, generating adequate returns in all business lines.

MISSIONWe are a company that offers a variety of quality financial services, enabling our customers to meet their requirements for family prosperity and financial security. We create value for our shareholders, building trust-based relationships in our interactions with others and fulfilling our role as good corporate citizens. We offer the necessary conditions for people in our organization to develop their full potential in a challenging working environment where respect for our values is demonstrated.

VALUESINTEGRITY: Ethics, transparency and honesty are part of our

work.

EXCELLENCE: We always strive to do a good job characterized by quality.

RESPECT: We treat others with dignity, we fulfill our commitments and we comply with company rules.

COOPERATION: We participate actively in our team and contribute to other areas to achieve company objectives.

PROACTIVENESS: We set challenges for ourselves and take the initiative to make improvements that contribute to our work and that of others.

FLEXIBILITY: We are open and adapt to new ideas, procedures and practices that add value to our performance and to Consorcio.

84


CHAP

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CUSTOMER RELATIONSHIP

RESPONDING TO A MORE CONNECTED AND INFORMED CUSTOMER

Today, insurance customers live in an interconnected world, with access to a multitude of high quality services and quick solutions. This, in turn makes them increasingly more demanding and informed customers.

This is a phenomenon that the Consorcio Financiero S.A. insurance companies detected since its inception. For this reason, the group has built solid models of interactions with its customers that promote timely quality care, with accurate and useful information. Along with this, it strengthens the bonds of trust, with empathy, and in connection to different needs.

This spirit has evolved into a Customer Plan and is currently based on six strategic pillars:

• Customer knowledge and information• Experience with customers and processes• Digital interaction plan and support platform • Customer-focused people culture • New legislation • Consultancy, transparency and communication

CUSTOMER KNOWLEDGE AND INFORMATION

A central pillar of the Customer Plan has involved conducting detailed research and gathering knowledge on the insured parties, who over the years have provided information that has been fundamental in maintaining a quality service. This is a challenging job considering the broad portfolio of products and channels offered by the companies and includes the following focal points:

1. Study of customer satisfaction levels in the relationship with the company.

For this, the company analyzes all processes from the moment the customer enters a company and throughout the duration of the relationship, including changes in its life cycle. These studies are periodical and provide a verification of whether improvements are perceived and valued by customers.

On this point, in 2016 there was considerable progress in the satisfaction indexes registered in the vehicle claims process, where the application of a series of changes resulted in an increase of over 10% in the satisfaction rates in the renovation.

2. Further and expand the knowledge of customers who leave the company or retain products with another company.

In 2016, in-depth interviews were conducted for specific products, which provided valuable information about improvement opportunities in each business line. It also included customers who ask for quotes, but ultimately choose the competition in the purchasing process.

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EXPERIENCE WITH CUSTOMERS AND PROCESSES

The Customer Plan seeks to concretely improve the customer experience with each of the products. To this end, specific interventions and plans are applied in company processes. In 2016, an important step was taken in this pillar by incorporating this model with the distributors/brokers, in what is being called the Experience, Digital Relationship and Communications Model with the Distributor Customer.

In this context, “customer travel” and critical processes in the collective and commercial lines were modeled and their value propositions validated, which resulted in a plan with strategic projects to be implemented during 2017.

DIGITAL INTERACTION

Consorcio Financiero’s insurance companies have set out to be leaders and benchmarks in the digital world. For this they constantly monitor the latest trends and keep a detailed schedule of initiatives and projects with this objective in mind.

Within this strategy, a central concept is the Consorcio.cl website, which continued to improve its life insurance and general insurance lines in 2016. Among other activities, the help center was improved, which now has a smart engine capable of understanding the query and providing the most accurate response. A special help center for vehicle insurance was also incorporated, which provides support and information for reporting a claim and following up online. These services will also be available in a mobile app in early 2017, to provide greater customer ease and accessibility in resolving needs.

In terms of e-commerce, the company continued the strategy of permanently expanding its online product array. In 2016, new developments included Consorcio Pet Insurance, and the company worked on the development of new savings and protection products that will soon be available to our customers.


CHAP

.

WIdE ARRAy OF PROdUCTS ONLINE AT CONSORCIO.CL

• AUTOMOBILE INSURANCE • HOME INSURANCE • MULTIPLE THIRD-PARTY LIABILITY

INSURANCE• CONSORCIO PET INSURANCE• OBLIGATORY PERSONAL ACCIDENT

INSURANCE (SOAP)• OBLIGATORY PERSONAL ACCIDENT

INSURANCE FOR FOREIGN VEHICLES (SOAPEX)

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87

SOCIAL NETWORKS, A NEW CHANNEL FOR EDUCATION

Insurance companies have maintained a very active presence in social networks, with the aim of transforming them into educational and informational platforms, as well as a channel for responding to customers’ needs.

The insurance companies provide didactic and highly audiovisual information online, in keeping with new trends. The Consorcio.cl Youtube channel has over 35 specific educational videos per topic and product, to help understand the world of insurance in a friendly and entertaining way.

In 2016, the company continued the development of “Welcome Iconographics”, released in 2015 in vehicle insurance. This incorporated APV customers last year, who receive an illustrated PDF with hyperlinks to videos that explains in a simple way topics such as contact channels, product details, services available.

This informative communications effort is in line with new guidelines issued by the authority to further the customer care standards in the insurance industry (circulars Nº 20,667 and Nº 2,131, Market Behavior)

The growth in the companies’ social networks has been organic, with a community of more than 66,885 users. These platforms are the central means of promoting niche products such as the aforementioned Pet Insurance.

And since social networks build communities with a common spirit, these were very active channels in the celebration of the 100-year anniversary of Consorcio. These networks deployed specific posts for the commemoration campaign, such as the “entuidioma” (in your language) site with a series of testimonials from customers who shared their experiences with different products.

CUSTOMER-ORIENTED CULTURE

Any effort to build trust and bonds with customers through different platforms and models must be rooted in an organizational culture where employees are the first to understand and ensure quality attention.

In this line, the Customer Plan is widely shared with workers and has been incorporated into the training curricula for the various business lines. Likewise, measurement systems have been strengthened, incorporating specific customer attention variables into performance assessment, which has helped to make the value of each employee’s contribution tangible in customer satisfaction.


CHAP

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2016 NUMBERS

TOTAL CUSTOMER SERVICE INSTANCES

246,838VISITS/MONTH

CONSORCIOWEBSITE

IN BRANChES

17,054MONThLy AvERAGE

vIA CONTACT

21,112MONThLyAvERAGE

117,669 yOUTUBE

vIEWS

RECORD INJULY 2016

3,601TWITTER

FOLLOWERS

AS OF DECEMBER 2016

66,885 FACEBOOk

FANS

AS OF DECEMBER 2016

PHONE CALLS ANSWERED

88


LIFE INSURANCE INDUSTRYAs in the previous year, in 2016, the dynamism of the Chilean economy continued. Despite this context, the life insurance industry continued the dynamic growth it had already shown in 2015. In fact, there was an increase of Ch$ 5,845,148 million in revenues from premiums sold, an increase of 15.1% over the previous year.

All branches of the industry showed expansion, which accounts for the market development and maturity and, despite a more contracted economic environment, customers are still looking for protection.

Once again, this growth was driven by the sale of annuities, which reached Ch$ 2,759,473 million in premiums, 17.7% above recorded levels in 2015. The growth in the number of pensioners in the industry is due to demographic factors.

The annuities mode continues to attract the preferences of pensioners in the pension industry in recent years. A transfer of the financial risk of accumulated funds together with the risk of longevity, thus obtaining a fixed income in UF for life, are the main attractions for future pensioners. This explains why 73% of all pensioners in the industry opt for this mode, versus the 27% who prefer the scheduled withdrawal option.

In 2016, there was an important level of competition between the different life insurance companies that participate in the annuities market. Of the top four companies, Consorcio was ranked first, with 17% of system payments.

Individual life insurance showed 16.9% growth, with premium revenues of Ch$ 932,903 million, again driven by savings insurance, which grew 16.4%, private income, with 39.9% growth, and term and endowment with 6.5% growth.

Voluntary Pension Savings (APV) maintained the double-digit growth shown in previous years. With premium revenues of Ch$ 300,985 million, it increased 12.3% in 12 months. The two major attributes of APV, which explain the sustained growth year after year in this product, are that it is voluntary and can be withdrawn at any time

89

LIFE INSURANCE

90

with the payment of the respective income tax, serving as a kind of unemployment insurance, or it can be left as a savings that complements the regular retirement funds accumulated. This trend shown in APV is perceived among all industry actors, such as AFPs, insurance companies and mutual fund managers, among others.

The disability and survival insurance (SIS) industry reached a total of Ch$ 545,199 million in direct premiums, 16.3% more than in 2015, which is explained by the change in the cost of insurance due to the new ruling from July 2016, passing from a rate of 1.15% to 1.41% in men and from 0.95% to 1.03% in women.

On the other hand, the collective insurance industry increased by 8.6% over the previous year, with revenues of Ch$ 516,946 million, which reflects a consistent growth in the penetration level of life and health insurance in companies over time.


2016 was a year of solid results for Consorcio Seguros Vida, mainly due to the good performance and diversification of its investment portfolio, together with a complete diversity of products and channels, with an important brand image and a high level of service. The result of this strategy allowed the company to reach a market share of 11.8% in 2016, growing about one percentage point over the previous year.

In 2016, Consorcio Seguros Vida obtained Ch$ 85,218 million in profits, with Ch$ 5,297,390 million in assets and Ch$ 500,477 million in equity.

Consorcio Seguros Vida’s direct premium amounted to Ch $ 692,321 million, 67.8% in annuities, 14.7% in individual life, 10.1% in APV, 3.2% in collective insurance and 4.2% in mass life.

The annuities business line again showed a major growth of 33.4%, above the 17.7% achieved by the industry. Premium income amounted to $ 469,060 million, with a market share of 17%. Although the industry grew compared to the previous year, helping Consorcio’s growth, an adequate diversification and effective administration of its distribution channels, added to the expert advice given to Customers, was the main reason that Consorcio showed a performance above market rates.

$500,477 MILLION

IN EqUITy AT yEAR ENd

$5,297,390 MILLION

IN ASSETS

11.8%MARkET ShARE

$85,218 MILLION

IN PROFITS

$692,321MILLION

2016 dIRECT PREMIUMS

RESULTS FOR CONSORCIO SEGUROS VIDA


CHAP

.


91

In 2016, 7,416 new pensioners joined Consorcio Seguros Vida, 60% of which were under the normal retirement annuities segment, 11% in early retirement annuities, 17% in disability annuities and 12% in survivor annuities.

Consorcio’s Individual Life business line maintained the direct premium levels from the previous year, despite the industry growth, reaching Ch$ 102,036 million. Income is distributed in 84.2% in flexible protection and savings insurance, 4.5% in temporary insurance and protection endowments, 1.8% in private income and 9.4% in other insurance.

In voluntary pension savings (APV), Consorcio Seguros Vida kept its first place in the market, with 23.1% of the industry and Ch$ 69,588 million in revenues. The APV managed balance reached Ch$ 252,306 million, showing an 11% increase.

On the other hand, collective insurance continued to be a high-growth product, reaching a two-digit increase, which it had already obtained in 2015, achieving a direct premium of Ch$ 22,308 million, which grew 12.6% in relation to the previous year, and a market share of 4.3%. In its permanent effort to improve the quality of customer service, in the last quarter of the year, this business line launched a mobile application for settlement of health expenses.

Since 2014, the company has increased its presence in the mass life business line, which had notable growth in 2016, mainly due to the awarding of tenders for mortgage repayment protection and consumption, an increase of 190%, reaching a premium of Ch$ 29,328 million, which represents 4.2% of company revenues.

DISTRIBUTION CHANNELS

In 2016, special emphasis was placed on expanding management and interaction mechanisms with each of the distribution channels. This has been reflected in the incorporation of a Business Management Model associated with business executives who manage the relationship with Distributor Customers. In addition, the company has incorporated a digital interaction and experience plan with Distributors.

The company also maintained ongoing improvement of its Internet channel, which, despite not being the main means for choosing life insurance, it shows a trend of constant growth. In line with the above, Consorcio Seguros Vida constantly studies and implements new practices to ensure the best customer experience through this channel.

7,416 PENSIONERS jOINEd CONSORCIO

SEGUROS vIdA EN 2016

FLEXIBLEPROTECTIONAND SAVINGS

INSURANCE

84.2%

1.8%

4.5%

9.4%

84.2%TERM AND

ENDOWMENTPROTECTION

INSURANCE4.5%

PRIVATE INCOME1.8%

OTHER INSURANCE9.4%

INCOME DISTRIBUTION VIDA INDIVIDUAL CONSORCIO SEGUROS VIDA

This achievement is further strengthened by the insurance market share of CN Life. When viewed in conjunction, the Consorcio group is

the market leader in life insurance, with Ch$ 810,340 million in premiums and 13.9% in

market share.

CN LIFE SEGUROS VIDA CN Life Seguros Vida is a company with more than 20 years of experience in annuities, characterized by a thorough knowledge of this pension mode and customer needs, with a specialized service. It is also one of the companies that participates in the disability and survival insurance (SIS).

Revenues closed the year at Ch$ 118,019 million in direct premium, which implied a market share of 2%.

Thus, CN Life Seguros Vida earned profits of Ch$ 9,942 million and equity of Ch$ 73,847 million.

Specifically, in annuities, CN Life Seguros Vida ended the year with Ch$ 45,409 million in revenues, reaching a market share of 1.6%. In terms of distribution channels, CN Life Seguros Vida sells annuities directly and through pension advisors, with 24% and 76% of the total premium, respectively.

In 2016, the average pensioner premium was Ch$ 93.2 million, 33% higher than the market value of Ch$ 70.1 million. Normal retirement represented 32.7% of the income generated by annuities, while premature retirement represented 18.0%, disability contributed 40.5%, and survivors’ 8.7%.

Regarding disability and survival insurance (SIS), in 2016 the authority carried out a new tender where CN Life Seguros Vida obtained a fraction of women. Revenue from SIS was Ch$ 72,377 million, contributing 61.3% of total revenue from CN Life Seguros Vida, and leaving it among the most active players in the area, with a 13.3% market share in this segment.

NORMALRETIREMENT

32.7%

18.0%

40.5%

8.7%32.7%

EARLYRETIREMENT18.0%

DISABILITY40.5%

SURVIVAL8.7%

92

Ch$73,847 MILLION

IN EqUITy AT yEAR ENd

Ch$118,019 MILLION

IN REvENUES 2016

Ch$9,942 MILLION

IN PROFITS

RESULTS CN LIFE SEGUROS VIDA

DISTRIBUTION BY TYPE OF PENSION CN LIFE INSURANCE LIFE


CHAP

.


93

GENERAL INSURANCE

GENERAL INSURANCE INDUSTRY In 2016, the general insurance industry grew above the Gross Domestic Product, reaching 5.4%, with premium income of Ch$ 2,456,135 million. The 30 companies that participate in this industry totaled assets of Ch$ 4,069,909 million and a total equity of Ch$ 736,412 million.

The dynamism of the industry was not evenly distributed throughout the different areas, which accounted for the specifics of each product. The segments with the highest percentage of growth were unemployment insurance, warranty and personal accidents.

Unemployment insurance showed revenues of Ch$ 189,528 million, which implied a growth of 30% and 7.7% of total premiums. Warranty grew 22.0% with a total premium of Ch$ 38,835 million. Personal accidents totaled revenues of Ch$ 83,892 million, with growth of 13%.

Vehicle insurance is among the branches that grew at less than double-digit rates during 2016, which recorded premium income of Ch$ 693,487 million, showing growth of 9.6%, which represents 28.2% of the total premium of the industry.

The fire, earthquake and additions branches registered premium revenues of Ch$ 816,096 million, equivalent to 33.2% of the total premiums in the industry, and showed a moderate growth of 2.9% over the previous year, reflecting the existence of a market with dropping prices throughout the year.

Obligatory personal accident insurance for accidents involving motor vehicles (SOAP) showed a 6.5% decline in intermediated premiums in 2016, with Ch$ 45,497 million in revenues. This performance is explained by the growing competition in prices for this product and the growth of distribution of this insurance through mass-market and digital channels.

The remaining 24% of total premiums in general insurance, which is made up of theft, transport, earth and sea vehicles, loan insurance, among others, registered premiums of Ch$ 588,800 million after a 2.2% drop over 12 months.


CHAP

.

94


2016 was a great year for Consorcio Seguros Generales, obtaining important growth in direct premium and profits, which is mainly explained by the effective multichannel management strategy, an effective improvement plan for claims management and the optimization of price and sales volume in vehicle pricing.

The volume of company assets was Ch$ 92,164 million and its equity stood at Ch$ 21,626 million. Profits were Ch$ 3,344 million. Revenues from direct premiums were Ch$ 74,014 million, a 14% expansion over the previous year.

In 2016, the segment that concentrated the highest premium volume was vehicle insurance, which generated revenues of Ch$ 41,146 million, equivalent to 55.6% of the total premium. In this segment, the company has a 5.9% market share and is in the seventh place among the insurers.

It is followed by the fire, earthquake and additions line, which grew by 23.5% in 2016 and recorded direct premium income of Ch$ 12,705 million, representing 17.2% of the company’s total revenues. Consorcio Seguros Generales achieved a market share of 1.6% in this segment.

In the theft branch, Consorcio Seguros Generales has shown sustained growth over the past few years, situated at 11.5% during this 12-month period. Premium income in this segment reached Ch$ 4,716 million, allowing it to reach a market share of 5.4% and a weight in the product mix of 6.4% of the company’s total premium.

On the other hand, obligatory personal accident insurance for accidents involving motor vehicles (SOAP) revenues showed a 19% decrease and direct premium income of Ch$ 4,710 million, reaching a market share of 10.4%. The lower annual premium obtained in this line of business is mainly due to a decrease in prices, a product of highly competitive retail and banking strategies, coupled with the effect of increased competition in web comparators.


95

Within the Warranties branch, the Green Warranty product, which insures the down payment from buyers in real estate in the early stages of development, continues to consolidate within the line, generating a 26.7% growth in the entire industry.

In 2016, personal accidents registered a significant growth of 51.7%, reaching Ch$ 1,622 million of premium income. Significant progress was also made in the areas of unemployment insurance, with a growth of 87.1% and premium income of Ch$ 562 million, and third-party liability, with a growth of 43.7% and sales of Ch$ 970 million.

Finally, other branches, which represented 9.6% of total revenues from Consorcio Seguros Generales premiums, reached Ch$ 7,106 million, with a 6.9% growth. The mass and corporate insurance channel explains this performance in an important way.

IN LINE WITH THE NEEDS OF CHILEANS

Consorcio Seguros Generales is constantly concerned with researching consumer trends in product protection in Chile and around the world, thereby anticipating the launch of products to solve these needs, contributing to a sustained growth over time.

An example of this is the development of SOAPEX, obligatory personal accident insurance for foreign cars entering Chile. Developed in 2014, Consorcio was the second company to launch this product. In 2016 SOAPEX had a growth of 175%.

In terms of product innovation, Seguros Generales launched the multiple third-party liability insurance, which protects against a series of damages to third parties produced by a family member, dependent minor or pet. Once again, this is a product that addresses the new realities faced by Chileans, and the company seeks to respond with the development of new risk coverage.

Another successful strategy of Consorcio Seguros Generales is the efficient, up-front work with sales channels, achieving significant progress in 2016. The company interacted systematically with the ANS (Alliances and Business in Insurance) group, which brings together about 400 brokers.


CHAP

.

96

Ch$74,014 MILLION

IN REvENUE FROM dIRECT

PREMIUMS

Ch$3,344 MILLION

IN NET INCOME

Ch$92,164 MILLION

IN ASSET vOLUME

14%GROWTh IN

REvENUEOvER 12 MONThS

Ch$21,626 MILLION

IN EqUITy

2016 was a great year for Consorcio Seguros Generales, which is mainly explained by the effective multichannel management strategy,

a satisfactory improvement plan for claims management and the optimization of price and

sales volume in vehicle pricing.

RESULTS FOR CONSORCIO SEGUROS GENERALES

Significant agreements were reached in the dealers channel with new car dealers and representatives of major automotive brands, which has led to growth at double-digit rates.

Finally, in 2016, special emphasis was placed on perfecting the management and interaction mechanisms with each of the distribution channels, which is reflected in the Distributor Customer Plan. This ambitious project has two areas of action: a Business Management Model and a Digital Experience and Interaction Plan with Distributors. The first of these involved the development of a transversal management system of sales teams that work with brokers, which was elaborated wholly by Consorcio Seguros Generales and is a pioneer in Chile.


ON LINE

56%44%

56%

IN PERSON44%

DISTRIBUTIONOF TRAINING

HOURS

HUMAN CAPITAL

100 YEARS OF PRIDE AND COMMITMENT

Consorcio Seguros Vida, Consorcio Seguros Generales and CN Life performed multiple activities in the celebration of the company’s 100-year anniversary, which emphasized the pride of belonging to a conglomerate with a track record and prestige. Their overarching purpose was to thank people for their commitment and turn their focus to the future with a strong projection for the next 100 years.

This celebration with a focus on the future is in line with the global human capital strategy of the three insurers controlled by Consorcio Financiero, which places people at the center, under the firm conviction that companies with strong ties with their teams are able to make long-term projections.

MANAGEMENT PILLARS

In 2016, human resources management was organized around 10 working focal points, which place the group as an innovative conglomerate in terms of labor practices, backed by international certifications.

2016 HUMAN CAPITAL FOCUS POINTS

FOCUS GOAL

WelcomeEnsure that everyone who joins Consorcio has timely access to knowledge and tools that enable their early integration into the company.

Learning Develop generic and Consorcio-specific business competencies, as well as technical competencies based on the segments and needs of the different lines.

Competency-based Performance

Maximize the level of competencies by position segment, providing the conditions for leaders to support the development of their teams.

Positive AtmosphereStimulate a work environment that promotes the comprehensive well-being of the people, strengthening the pride of belonging.

Corporate Social Responsibility

Install a framework of actions and practices that contribute to the community through education and environmental sustainability, thus fulfilling our role as a good corporate citizen.

PROMOTING A POSITIVE ATMOSPHERE

In 2016, one of the main focal points was the positive atmosphere, given the conviction that people and teams who optimistically face daily challenges have better results and personal well-being.

To achieve this positive attitude, contents in this line were integrated into the training programs and specific talks and workshops were held. One of these was the “I like YOU” initiative, which included the participation of employees from the three insurance companies. This involved a full day of non-work activities that invited employees to explore their talents and experiences, to discover their potential and interests in other areas and to extrapolate this energy and motivation into their daily work.

Quality of life activities also targeted this positive atmosphere focus, inviting employees to develop new areas of interest. For example, the Cycle of Talks offers a space inside the work routine to discover new topics and topics of general interest, proposed by the employees themselves. Topics as diverse as the use of technology with children and adolescents, work inclusion and healthy eating and even new developments in astronomy and renewable energies were addressed.

1,142PEOPLE SIGNEd UP FOR qUALITy OF

LIFE CyCLE OF TALkS

Athletics is also relevant for personal well-being. With this conviction in mind, the Insurance Companies have nine athletics activities with periodic training between March and November, such as football (both female and male), yoga and Zumba. 260 people participate actively in these initiatives.

INCREASING WORK COMPETENCIES

To keep team training aligned with the company´s strategic objectives, the human resources area is constantly developing training programs.

In 2016, the first group of graduates received their Management Skills and Personal Skills diplomas from the Universidad Adolfo Ibáñez (UAI), which offered these courses geared towards management and administrative positions, respectively. In total, 119 people received their diploma and another 28 completed their studies leading to a diploma through UAI eClass.

Programs were carried out with sales and operations teams, whose purpose was to develop skills to mobilize commitments, coordinate actions and orchestrate states of mind in teams.

2016 TRAINING

NUMBER OF PEOPLE TRAINED

NUMBER OF HOURSTRAINING

PARTICIPANTS

Total 2,276 158,260

97

98

Human Resources Management at the Insurance Companies has been supported by the solid numbers obtained in the organizational climate studies. In 2016, 10 variables out of 15 improved compared to 2015. These include “Development”, “Training”, “Merit” and “Identification with the company”.

A YEAR OF ACKNOWLEDGMENTS

A cross-cutting feature of the culture of Consorcio Financiero’s subsidiaries is the use of research tools to continuously improve performance. This is materialized in studies and measurements, based on independent consultancies, as well as the use of international methodologies.

Top Employer Chile 2016: One of the most ambitious world-class certifications achieved is “Top Employer Chile” awarded by the Top Employers Institute. In 2016, it was awarded to the Consorcio insurance companies for the third year running.

This qualification acknowledges and certifies that the practices and “excellent working conditions” of the Consorcio Financiero insurance companies comply with international standards in nine areas, notable among which are talent strategy, learning and development policies, career management and succession and cultural aspects, such as values, commitment and communication.

Top Employers Institute analyzes the most relevant labor practices and standards and compares these in nearly 1,100 certified companies worldwide. In Chile, only four companies have achieved Top Employer status.

Merco Talento: This international ranking measures the central characteristics of a company to attract and retain employees. It evaluates the quality of the working environment and aspects related to companies’ internal and external reputation. In Chile, one hundred companies are ranked.

In 2016, Consorcio ranked first in the sector ranking for the second year in a row. In addition, it placed first in the people benchmarking ranking, which corresponds to the comparison of specific people management indicators. In the overall ranking, it placed 22nd.

DIRECT LINK BETWEEN EMPLOYEES AND THE COMMUNITY

Consorcio places a great deal of importance on maintaining close ties with the community and making contributions that help people improve their lives.

The active role that Consorcio executives and employees have in Fundación Consorcio and the Monte Olivo School in Puente Alto is an important part of this principle (more details in the Fundación Consorcio chapter).


CHAP

.

99

12FOUNdATIONS PARTICIPATEd IN

ChRISTMAS WITh A CAUSE

• CAUSA MINKA• FUNDACIóN COANIL• CASA DE LA FUENTE• FUNDACIóN INCLUIR• FUNDACIóN LA FUENTE’S BIBLIOTECA VIVA

(LIBRARY)• HEBRAS DEL ALMA• FUNDACIóN JULIETA• CENTRO LABORAL TAñI• ACN CHILE• FUNDACIóN TRABAJO PARA UN HERMANO • FUNDACIóN LAS ROSAS• FUNDACIóN ACADEMIA VITRAL

One of the activities in this area is the Tutoring Program, which consists of the direct and close mentoring between insurance company executives and middle school students who are defining their future higher education options. 17 managers and assistant managers participated in this program, mentoring students from Monte Olivo School and Fundación Belén Educa.

The process involved individual meetings between each mentor and student, where the young people were able to talk about their expectations and discover the value of continuing education. Based on individual expectations, each mentor sought to motivate students to make good decisions and continue their studies.

ACADEMIC EXCELLENCE

This year, as part of the traditional Academic Excellence program, 144 children of Consorcio employees were awarded, who obtained a general average in 2015 equal to or greater than 6.5.

At the national level, a printed book with the photographs of all the prizewinners in the Consorcio anniversary year was given to the parents of the beneficiaries. In Santiago, an awards ceremony was also held, where they received a gift, a diploma and a medal.

Children in Santiago 80

Children in Regions 64

TOTAL ChILdREN AWARdEd 144

WORKING FOR THE ENVIRONMENT

The environment is a constant concern in Consorcio management, which in 2015 formally began a recycling campaign.

In its second year of operation, REMBRE once again is responsible for the collection, making weekly pickups of recycling material from the containers installed. For paper recycling, the company has an agreement with Fundación Las Rosas.

Achievements of the 2016 recycling campaign

AMOUNTSRECYCLED EQUIVALENT TO…

518 kg of cardboard 26 m3 of water saved35 10-meter trees not cut down

189 kg of aluminum2,646 kWh of energy saved1,701 kg of CO2 not released into the atmosphere17 m3 of water saved

2,444 kg of paper

10,020 kWh of energy saved2.200 kg of CO2 not released into the atmosphere65 m3 of water saved42 10-meter trees not cut down

517 kg of plastic 2,985 kWh of energy saved776 kg of CO2 not released into the atmosphere

37 kg of Tetra Pak 4 m3 of water saved

SUPPORT TO COANIQUEM AND FUNDACIÓN SONRISAS

The insurance companies support the community in diverse ways. One of these is their historic alliance with Coaniquem, a relationship that is already going on 11 years. Through this agreement, the company provides a percentage of SOAP sales to this institution that supports burned children.

Fundación Sonrisas also supports many Chileans by providing dignified dental solutions. Consorcio supports this mission with an annual donation.

In 2016, it continued to expand this relationship with social foundations with an unprecedented Christmas fair. Twelve nonprofit foundations participated in this, installing their stands in the Corporate building of Consorcio Financiero with a wide array of novel and practical gifts for sale.

YOUR BANK AS YOU’D LIKE IT TO BE

102

104

107

108

109

110

112

113

114

115

118

6.2 BANCO CONSORCIO

BOARD OF DIRECTORS

EXECUTIVE COMMITTEE

HIGHLIGHTS

BANk MISSION, VISION AND VALUES

BANk HUMAN CAPITAL

CUSTOMER MANAGEMENT

BUSINESS MANAGEMENT

PEOPLE

COMPANIES

FINANCE

STOCk BROkERAGE

101

06 CHAP

.

BUSINESS MANAGEMENT

CRISTIÁN ARNOLDSREYESDIRECTOR

Chilean Tax ID 6.972.469-8Industrial Civil Engineer Pontificia Universidad Católica de ChileMaster’s Degree in Business AdministrationWharton School, University of PennsylvaniaOn board of directors since: 04/05/2013

JOSÉ ANTONIO GARCÉSSILVADIRECTOR

Chilean Tax ID 8.745.864-4Business Administration DegreeUniversidad Gabriela MistralMaster’s Degree in Business AdministrationUniversidad de los AndesOn board of directors since: 09/15/2011

CRISTIÁN COXVIALDIRECTOR

Chilean Tax ID 7.033.709-6Industrial Civil Engineer Pontificia Universidad Católica de ChileOn board of directors since: 04/05/2013

102

BOARD OF DIRECTORSBANCO CONSORCIO

RICHARD BÜCHI BUCINDEPENDENT DIRECTOR

Chilean Tax ID 6.149.585-1Civil EngineerUniversidad de ChileMaster’s Degree in Business AdministrationWharton School, University of PennsylvaniaOn board of directors since: 12/30/2014

2016 ANNUAL REPORT CONSORCIO FINANCIERO06 BUSINESS MANAGEMENT / 6.2 BANCO CONSORCIO

CHAP

.

JULIO GUZMÁN HERRERA

INDEPENDENT DIRECTOR


Pontificia Universidad Católica de ChileOn board of directors since:

11/26/2009

PEDRO HURTADOVICUÑA

DIRECTOR

Chilean Tax ID 6.375.828-8Industrial Engineer

Universidad de ChileOn board of directors since: 09/15/2011

ANA MARÍA RIVERATAVOLARADIRECTOR

Chilean Tax ID 12.094.411-8Business Administration

Miami Dade Community CollegeOn board of directors since:

11/26/2009

JOSÉ MIGUEL URETACARDOEN

INDEPENDENT DIRECTOR

Chilean Tax ID 9.612.711-1Industrial Civil Engineer

Pontificia Universidad Católica de ChileMaster’s Degree in Business Administration

Harvard UniversityOn board of directors since: 12/30/2014

103


Pontificia Universidad Católica de Chile

Master’s Degree in Business Administration

Harvard UniversityOn board of directors since:

11/26/2009

PATRICIO PARODI GILCHAIRMAN

104

EXECUTIVE COMMITTEEBANCO CONSORCIO

1.10.9. 2. 13.

3.8.7. 12. 5. 4. 11.6.


CHAP

.

105

1. FRANCISCO IGNACIO OSSA G.CHIEF EXECUTIVE OFFICER

Business Administration DegreeUniversidad de los AndesMaster’s Degree in Business AdministrationINSEADDate appointed: 26-11-2009

2. FERNANDO AGÜERO A. COMMERCIAL BANKING MANAGER

Business Administration DegreePontificia Universidad Católica de ChileMaster’s Degree in Business AdministrationIESEDate appointed: 07-06-2010

3. MARA FORER I.FINANCE MANAGER

Business Administration DegreeUniversidad de ChileDate appointed: 14-12-2009

4. GONZALO GOTELLI M.OPERATIONS AND FINANCIAL OVERSIGHT MANAGER

Industrial Civil EngineerUniversidad de SantiagoMaster’s Degree in FinanceUniversidad de ChileDate appointed: 26-11-2009

5. JESSICA HERNÁNDEZ V.COMPTROLLER

Civil Engineer in GeographyUniversidad de SantiagoMaster’s Degree in Business AdministrationUniversidad de ChileMaster’s Degree in Financial ManagementUniversidad Adolfo IbáñezDate appointed: 01-08-2011

6. ÁLVARO LARRAÍN P.LEGAL AND COMPLIANCE MANAGER

AttorneyUniversidad Diego PortalesMaster’s Degree in Business LawUniversidad Adolfo IbáñezMaster’s Degree in Business AdministrationPontificia Universidad Católica de ChileDate appointed: 14-12-2009

7. RAMIRO MÉNDEZ M.RETAIL BANKING MANAGER

Industrial Civil EngineerPontificia Universidad Católica de ChileDate appointed: 01-07-2016

8. JOSÉ LUIS MIÑO V.TECHNOLOGY MANAGER

Industrial Civil EngineerUniversidad Técnica Federico Santa MaríaMaster’s Degree in Business ManagementUniversidad Técnica Federico Santa MaríaDate appointed: 26-11-2009

9. FRANCISCO NITSCHE C.HUMAN RESOURCES MANAGER

Business Administration DegreeUniversidad de TarapacáMaster’s Degree in Human Resources and Organizational ManagementUniversidad Adolfo IbáñezDate appointed: 31-01-2014

10. FRANCISCO PEREZ O.CHIEF EXECUTIVE OFFICER CONSORCIO CORREDORES DE BOLSA

Civil Engineer Pontificia Universidad Católica de ChileMaster’s Degree in Business AdministrationUniversity of ChicagoDate appointed: 04-04-2016

11. JAIME RIQUELME B.RISK MANAGER

Business Administration DegreeUniversidad de SantiagoMaster’s Degree in FinanceUniversidad de ChileDate appointed: 26-11-2009

12. ANDREA RODRIGUEZ A.MARKETING AND CUSTOMER SERVICES DEPUTY MANAGER

Accountant-AuditorUniversidad de TalcaDate appointed: 10-02-2014

13. GONZALO VAN WERSCH M.BUSINESS DEVELOPMENT MANAGER

Industrial Civil Engineer Pontificia Universidad Católica de Chile. Master’s Degree in Business AdministrationUniversidad de Chicago.Date appointed: 04-07-2016

106

SUMMARY OF THE CONSOLIDATED FINANCIAL STATEMENTS

DEC-2015CH$M

DEC-2016CH$M

DIFFERENCECH$M

ASSETS

Cash and Cash Equivalents 59,297 87,345 28,048Total Net Loans 1,590,997 1,792,983 201,986DPV Fixed Income Investments 803,321 1,169,090 365,769Mutual Funds and Other Trading 89,097 66,573 -22,524Transitory Assets 74,902 32,762 -42,140Fixed Assets 7,016 6,745 -271Other assets 87,448 82,964 -4,484

TOTAL ASSETS 2,712,078 3,238,462 526,384

LIABILITIES

Demand Obligations 56,802 58,997 2,195Term Deposits 1,563,036 1,748,107 185,071Bank balances 123,469 176,073 52,604Transitory Liabilities 59,706 24,176 -35,530Other Liabilities 308,309 388,871 80,562Senior Bonds 213,675 351,954 138,279Subordinated Bonds 101,194 104,145 2,951Equity 285,887 386,139 100,252TOTAL LIABILITIES ANd EqUITy 2,712,078 3,238,462 526,384

INCOME STATEMENT

Retail Banking Margin 10,575 8,992 -1,583Corporate Banking Margin 28,600 31,205 2,605Finance Margin 9,408 25,593 16,184Stock Brokerage Margin 6,485 9,957 3,472TOTAL MARGIN 55,069 75,747 20,679

Fixed Expenses -14,235 -16,672 -2,437Net Operating Income 40,834 59,076 18,242Taxes -5,442 -11,359 -5,917FINAL RESULT 35,392 47,716 12,325


CHAP

.

107

BUSINESS LINESPERSONAL

• CONSUMER LOANS• MORTGAGE LOANS • VISA CREDIT CARD• PREFERENTIAL ACCOUNT• TERM DEPOSITS

FINANCE

• CURRENCY TRANSACTIONS

• DERIVATIVES• CAPTURES• PURCHASES• TERM DEPOSITS

CORPORATE

• COMMERCIAL LOANS• REAL ESTATE FINANCING• FACTORING• LEASING• FOREIGN TRADE • GUARANTEES• SALARY PAYMENT

STOCk BROkERAGE

• SHARES• MUTUAL FUNDS• TERM DEPOSITS• PURCHASES• SIMULTANEOUS

OPERATIONS

9OFFICES

81,546CUSTOMERS

US$ 577MILLION

BASE CAPITAL

US$ 732MILLION

EFFECTIvE EqUITy

18.1%BASEL INdEx

US$ 4,837MILLION

IN ASSETS

714EMPLOyEES

AA-FELLER RATE

(STABLEOUTLOOK)

AA-ICR

(STABLEOUTLOOK)

108

OUR VISIONTo become a relevant actor in the banking industry, with a market share over 2%, with a universal, modern and tailored approach to banking that generates sufficient profitability in all business lines and an above average return on equity among midsized banks.

OUR MISSIONWe are a universal, modern and tailored bank that offers a variety of quality financial services, enabling our customers to meet their financing, savings and payment needs. We create value for our shareholders, building trust-based relationships in our interactions with others, and we offer the conditions necessary for people to develop their full potential in a challenging working environment where respect for our values is demonstrated.

VALUES

RESPECT

FLEXIBILITY

COOPERATION

EXCELLENCE

INTEGRITY

PROACTIVENESS

06 BUSINESS MANAGEMENT / 6.2 BANCO CONSORCIO

CHAP

.

MALE45.9%

54.1%

DISTRIBUTION OF EMPLOYEES BY SEX

45.9%

FEMALE54.1%

ORGANIZATIONAL DEVELOPMENT

Human Resources focused primarily on identifying the profile of employees during the year, to understand their motivation, requirements and concerns, thereby creating the BanCOnectate Program, “YOUR life work balance”, with the aim of identifying synergy between personal goals and the organization’s objectives.

The program had a positive impact on the institution. Evidence of this can be seen in the results of the 2016 Employee Climate Survey, which indicated significant improvements in climate and identification.

RISK PREVENTION

The Joint Committees at the two main offices were awarded Bronze certificates in 2016, positioning Banco Consorcio as the only company in the Bank with two committees that currently hold awards.Meanwhile, the Bank reduced its accident rate from 1.35% in 2015, to 0.97% in 2016.

36%RETAIL

BANkING

20%OPERATIONS

11%CORPORATE

BANkING

109

HUMAN CAPITAL

A corporate identity for the department was developed during 2016, to strengthen long-term and beneficial relationships for employees and for the Bank. It aims to ensure that employees always receive an effective response to their requirements, to improve processes, to deliver excellent training and to effectively manage risks.

The Bank employed a total of 714 people this year, with an average age of 41. 54% are female and 46% male. The departments employing most staff are retail banking (36%), operations (20%) and corporate banking (11%).

The three departments employing most staff are:

714 41 EMPLOYEES

BANk AND SUBSIDIARIESYEARS OLD

AVERAGE AGE


CHAP

.

b. Ensure that the customer perceives the Bank as a single entity, so that customer service and query resolution should be performed in the same way, regardless of the channel used. This required:• Reviewing and pacifying the Single Service Model.• Preparing an array of customer requirements by product, sorted

by service channel and office.• Identifying improvements and standardizing customer service

channels (call center, virtual banking, branch offices, contact us)

c. Ensure that staff in contact with customers is trained in service, products and tools. This required two training approaches:• General training for staff in contact with customers, regarding

the company, its products, workflows, service, systems and tools.• Specific training with content relating to the position. This is

being reviewed and will be implemented during 2017.

Customer service achievements at the Bank include:

1. Increase in satisfaction amongst mortgage loan customers. This was due to a four-point decrease in dissatisfied customers at all loan stages.

2. 14% increase in compliance with protocols by staff in contact with customers in comparison to the previous year, with 86% overall compliance.

3. Improvement in Sernac ranking that measures how problems presented by customers are received.

4. 15.2% decrease in the claim rate on the customer portfolio, in comparison to the previous year.

2017 CHALLENGES

Continue with the strategic project to reinforce a service culture, making this culture stronger and uniform across all business lines.

Continue measuring the customer’s net promotor score (NPS) on a monthly basis, and continuously resolve the gaps encountered, in order to improve the customer experience.

CUSTOMER MANAGEMENT

Banco Consorcio continued to promote a culture of service this year, strengthening the delivery of a clear, familiar and timely service, that improves customer’s experience every day.

Special emphasis was placed on seeking customer’s opinions, to identify the gaps, and to improve and secure a satisfactory service experience.

Three instruments were implemented to identify these gaps and the management tools required to improve service quality:

a. Net Promoter Score (NPS). An indicator that measures the customer’s degree of loyalty based on recommendations. Monthly online and telephone surveys were conducted, in order to obtain the customer’s degree of satisfaction and promotion.

b. Servitest. This provides regular and comparative information with the competition. It was applied to two business segments.• Mortgages Measurement of overall service satisfaction by stages,

recommendation score (NPS) and benchmark.• Businesses Measurement of overall service satisfaction by

contact channel, recommendation score and a comparison with industry (benchmark), indicating the firm intention of interviewees to continue as customers, with a high probability of using the Bank for future transactions.

c. Secret Customer Evaluates compliance with general behavior protocols defined for each customer service channel (in person, by telephone and in writing) and identifies opportunities to improve service standards by resolving the gaps encountered.

Work has focused on three areas, as a result of information gathered from these studies:

a. Ensure that all employees manage the same information via formal channels, so that customer contact can be harmonious and only the necessary information is handled.• Establish an employee communication plan, through bi-monthly

meetings by manager with homogeneous information.• Establish a customer communications plan to follow up on

routine communications.

110

BANK CUSTOMERSERVICE

24%

28%22%

10%

7%

9%

DISTRIBUTION OF CUSTOMER ATTENTION BY CHANNEL

24%CNS CUSTOMER

SERVICE28%CNS CALL

CENTER22%BANK CALL

CENTER10%

WEBSITE7%

VIRTUAL BANKING9%

87,484NUMBER OF CUSTOMERS ATTENdEd

By SERvICE ChANNELS IN 2016

111

112


CHAP

.

BUSINESS MANAGEMENT

A GREAT YEAR FOR BANCO CONSORCIO

Against the backdrop of a slowdown of the Chilean economy and particularly the banking industry, Banco Consorcio closed 2016 with record profits, mainly due to significant increases in the results of its Corporate Banking and Stock Brokering businesses.

Thus, the Bank’s net income was Ch$ 47,716 million in 2016, 34.8% above the net income of Ch$ 35,392 million for 2015, 18.1% higher than budget for the year and with a composition that matches the Bank’s balanced structure, and progressing towards its long-term goals. 53.1% of net income was explained by its commercial management, and to a lesser extent by the treasury business, which had been mainly responsible for growth in previous years.

Consolidated assets totaled Ch$ 3,238,462 million and net customer loans totaled Ch$ 1,792,983 million, driven by a sharp rise in commercial loans of 13.7% and in housing loans of 13.3% in the managed portfolio.

BANKING MARKET

As of December 31, 2016, the financial market’s total loan portfolio, net of provisions, reached Ch$ 145,780 billion, increasing by 2.3% over the last 12 months. Net income totaled Ch$ 1,964,924 million, 12.6% less than last year.

The annualized return on equity (ROE) at the same date was 11.0%, compared to 14.3% for the previous year. The total finance industry equity was Ch$ 17,803 billion at the same date, compared to Ch$ 15,426 billion for the previous year.

As of December 2016, Banco Consorcio’s loan portfolio (not including interbank or contingent loans) reached Ch$ 1,824,653 million. This makes the Bank the 10th largest in terms of loans, with close to 1.2% share of the banking industry, in contrast with its position as 11th largest with a 1.1% market share at the same date in 2015.

113

REGULATORY CHANGESThe Superintendence of Banks and Financial Institutions (SBIF) has been steadily increasing the regulatory requirements for entities operating in Chile in recent years. Therefore, during 2015 a new liquidity regulation was published, which refined the regulations with regard to the management and measurement of liquidity at banking companies, to align them with international best practice. It aims to strengthen liquidity risk management policies in banking, increase the quality and quantity of information provided to the public and regulators, incorporate the Basel III quantitative measures and improve the current regulatory requirements on term mismatches.

This legislation was implemented in a gradual manner, and during 2016 the Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR) and Funding Concentration measurements were introduced.

Banco Consorcio has adapted to this new liquidity standard, strengthened its corporate governance on these matters and incorporated monitoring indicators, such as concentration of liabilities, concentration of deposits by counterpart, renewal rates, detail of deposits by counterpart, average term and interest rates, and liquidity indicators.

Meanwhile, new regulations governing provisions on mortgage loans came into effect in January 2016. Until that date, each bank had its own internal model for creating these provisions, and as of January 2016, the Superintendence of Banks established a model based on minimum provisions.

This legislation meant that the risk index on the mortgage portfolio increased from 0.7% in December 2015 to 1.0% in January 2016. This fact required the industry to establish new provisions of Ch$ 116,226 million and limit the growth of loans that financed over 80%.

RETAIL BANkING

Retail banking was restructured during 2016, which initiated a strategy divided into two segments: preferred and mass segments, in addition to a convention for pensioners with Consorcio Seguros Vida and CN Life, with special loan products and means of payment.

This restructuring unified the sales channels, in order to channel all selling into a single sales model for mass banking through directed sales,

which provides pre-approved loan offers exclusively to customers with good payment behavior, significantly reducing the portfolio risk.

This progress was reflected by a 125% increase in the loans captured using this method, which have a risk index of less than 5%. This increase was achieved by opening the Puente Alto branch.

This year ended with retail banking achieving a margin of Ch$ 8,992 million and loans of Ch$ 154,124 million, representing a difference of 4.3% compared to 2015. The risk index significantly improved from 2.7% to 2.1%.

PREFERRED SEGMENT:

The Preferred segment brings together mortgage loan transactions and the Forum and Apoquindo offices.

Sales of mortgage loans totaled UF 4.7 million in 2016, which resulted in the company’s market share, including managed transactions, growing from 1.5% to 1.6%, which is the highest share achieved by the Bank in its history.

This increase in market share was possible due to: improvements in the management of agreements with real estate agents, relocating and new offices in Antofagasta, and improvements in services for our customers. This is reflected in the SERVITEST for the mortgage industry, where the Bank improved 2 points with respect to 2015, consolidating an increase of 17 points over the last two years.

The Forum and Apoquindo offices began new daily activities and a new management model in September 2016, with a focus on the preferred customers segment, by matching mortgage customers with consumer loan offers.

MASS SEGMENT:

The Mass segment is focused on customers with monthly income of less than Ch$ 1.2 million and has a value offer that is based primarily on consumer loans to customers with good payment behavior.

Sales of consumer loans totaled Ch$ 6,002 million in 2016 with a risk index of less than 5% and 30 days’ arrears of 1.6%, which is a significant improvement compared to previous years. This result is an increase of 68% compared to 2015 and is based on an increase in productivity of 12.2% and an increase in staffing of 25 sales executives.

114


CHAP

.

2017 CHALLENGES

The main challenges for 2017 are:

• Design and implement a comprehensive value offer for Preferred customers, developing products such as a Current Account, update the Bank’s credit card in order to offer a selection of products that would increase the cross-fertilization between products and the profitability of this segment. The main focus will be defining the service model, and preparing business teams for the launch of the new preferential bank in the first quarter of 2018.

• The mass banking segment is expected to continue growing, with the opening of its fourth office in Maipú having an important impact. This will require three new sales teams, to reach 150 by the end of 2017..

CORPORATE BANkINGThe corporate banking segment has had sustained growth in its margins and its loans since its formation, due to its priority focus on the quality of the service it provides to its customers. This trend continued in 2016, and the area reached a margin of Ch$ 31,205 million before fixed expenses and loans totaling Ch$ 1,670,529 million, representing an annual increase of 9.1% and 13.7%, respectively.

Revenue increased in 2016 due to higher spreads and commissions, and an increase in loans, where the highest growth was in factoring (15.7%), commercial loans (14.5%), and leasing (10.1%), totaling an increase of over Ch$ 200 billion for the year. The costs of the business were controlled, supported by a risk index below the industry average (1.7% vs 2.4%), a better funding structure due to an increase in the depositor base, and careful management of business costs.

Corporate banking provides differentiated value offers to its customers, by a team of highly professional business executives, which in turn are supported by executives specializing in foreign trade, leasing, factoring and foreign currency products, to advise them and provide solutions that are tailored to the specific needs of each customer. This achieves some of the main focuses of the Bank, which is to cross-fertilize products and keep customers loyal.

The Corporate segment is where Banco Consorcio serves companies with annual revenue over Ch$ 50,000 million. It increased its loan volume by 10% during 2016, consolidating itself as an important player in this segment. The growth in loans in the large business segment was 19%, and even more so for medium-sized companies, with significant positive variations in the commercial loans and factoring products.

115

The real estate department caters for companies in both the construction and real estate business, which maintained a remarkable dynamism during the year, and resulted in a 16% increase in total loans. This was a result of residential real estate projects and to a lesser extent financing for construction companies and land costs.

Finally, the corporate banking segment has a project evaluation and structuring team, which resolves longer-term and more complex financial requirements. Despite the reduction in economic activity in Chile during 2016, the growth of this segment was satisfactory, increasing loans by 13% and consolidating its presence in public concessions (roads, hospitals, ports and airports), in syndicated loans and in electricity generating projects using Non-Conventional Renewable Energy (NCRE). Through this financing, the Bank has reconciled three objectives that promote the development of Chile: a secure energy supply, economic efficiency and environmental sustainability, diversifying electricity generating sources and reducing its external dependence.

2017 CHALLENGES

2017 will be a key year for the Corporate Banking segment at Banco Consorcio, which will provide its customers with the new Current Account product and will continue to implement permanent improvements that will facilitate contact with customers and maintain a personalized service that will result in long term relationships with customers.

COMMERCIAL LOANS BY ECONOMIC SECTOR

FINANCE

The Finance Division achieved a positive gross margin of Ch$ 25,593 million, due to active management of fixed-income investments in local and international markets, and efficient management of the Bank’s term, currency and interest rate mismatches.

One of the main strategies was to take advantage of volatility in the interest rate curve, through careful management of term and UF/Ch$ mismatches. Furthermore, liquidity management in local and foreign currency, diversifying and optimizing funding sources and increasing the sophistication of liability management, all secured a healthy financing and liquidity structure at all times.

The Finance division is composed of an Investment Desk, which manages liquidity and the Bank’s investment portfolio and is responsible for ensuring structural balance sheet matching, both in terms of currencies and terms; and a Distribution Desk, which offers all of the Bank’s financial products to customers, such as buying and selling currencies, term deposits, exchange rate and inflation swap insurance, and other structured derivatives tailored to the specific needs of each customer.

DIVERSIFICATION OF LIABILITIES

A significant increase in bond issues supported increased diversification in the Bank’s sources of financing. In fact, during 2016 Banco Consorcio issued bonds for UF 6 million. At the close of the period, the total value of placed bonds was UF 17.5 million, equivalent to over 12.0% of total liabilities.

When this is added to capital increases of approximately Ch$ 64,696 million, it enabled the growth plan to continue and maintain Banco Consorcio’s equity strength, which closed with a Basel Index of 18.1% that compares favorably to the industry index of 13.8%.

COMMERCIALLOANS

88%

6%

2%4%

88%

FOREIGN TRADE6%

FACTORING4%

LEASING2%

REAL ESTATE

22%

12%9%

5%

5%

4%4%4%

4%3%

3%2%1%

1%

21%

21%

ENERGY12%

FINANCE ANDINSURANCE

ESTABLISHMENTYS22%

GRANTS9%

CONSTRUCTION5%

SERVICES5%

OTHERS4%

INDUSTRY4%

COMMERCE4%AGRICULTURE

/FORESTRY4%

AUTOMOTIVE3%TRANSPORT

AND STORAGE3%

FISHING2%STATE AND

DISTRICT1%

MINING1%

LOANS BY PRODUCT

DEC/16

0

650,000

1,300,000

1,950,000

2,600,000

3,250,000

3,900,000

ASSETS

(CH$M) LOANS

CASH

OTHERS

TRADING INSTRUMENTS

DPV INVESTMENTS

DEC/15DEC/14DEC/13DEC/12DEC/11

350,000 1%

0 0%

1,050,000

700,000

1,400,000

1,750,000

3%

2%

4%

5%

6%2,100,000

LOANS AND RISK INDEX

(CH$M) PORTFOLIO

RISK INDEX


BANkINGIN NUMBERS

116

CONSUMER

MORTGAGE

4%

90%

6%

2016

PORTFOLIO MIX

6%

4%

COMPANIES90%


0.0%

1.0%

0.5%

1.5%

2.0%

2.5%

MARKET SHARE

% CONSUMER

% OWN MHE AND ADM

% COMMERCIAL

% BANK

% OWN MHE

DEC/09 DEC/16

MIX OF RELEVANT ASSETSLOANS

TRADE INSTRUMENTS

DPV INVESTMENTS

84.9%

15.0%

38.6%

2.2%

59.2%

117

118


CHAP

.

STOCk BROkERAGE

INVESTMENT BUSINESS

The investment business at Consorcio Corredores de Bolsa S.A. (CCBolsa) is the result of a specific policy defined by the Board (investment, financing and financial risks policy) to diversify the portfolio and limit risks. This policy covers controlling company borrowing, and investing resources in a diversified range of fixed-income assets.

CCBolsa finances this portfolio using various funding sources, such as repurchase agreements with a diversified portfolio of customers, bank overdraft lines and banking credit lines without collateral.

CCBolsa decided to voluntarily ask a rating company for a risk rating and solvency report, in order to provide its investors and customers with security with respect to the transactions it performs. This classification is currently at AA- and is reviewed annually by the rating company, who arrange regular meetings with CCBolsa to assess its credit quality.

CCBolsa had a fixed-income portfolio of Ch$ 215,683 million in 2015, which rose to Ch$ 265,471 million at the end of 2016, representing 23% portfolio growth. This portfolio generated a gross margin of Ch$ 8,161 million in 2015, which rose to Ch$ 11,016 million in 2016, within a well-controlled inflation context.

Its main indicators include the borrowing ratio which ended the year at 5.2 times, and the asset coverage ratio of 63.3%.

PRIMARY ACTIVITIES

• Brokerage for third parties

• Investing its own local and international fixed income portfolio

119

Ch$265,471 MILLION

FIxEd INCOME PORTFOLIO

5.2 TIMES

BORROWING RATIO

Ch$11,016 MILLION

GROSS MARGIN

63.3%ASSET COvERAGE

RATIO

SECURITY BROKERAGE BUSINESS FOR THIRD PARTIES

CCBolsa serves its brokerage business customers using two platforms, a website and personal attention from executives, to process its equities, mutual funds and term deposits transactions.

Its web platform primarily serves individuals who trade equities, mutual funds and term deposits using its investment portal, where it is a pioneer in providing its services using the Internet, on a platform that allows customers to place orders online, without the intervention of third parties. Its personal platform has a team of executives that serve customers in a more personalized manner.

CCBolsa used its web and personal platforms to serve a portfolio of 19,700 customers in 2015, which rose to 21,000 in 2016. The company generated commissions totaling Ch$ 2,377 million in 2015, which rose to Ch$ 3,174 million in 2016.

CCBolsa has restructured its commercial team by creating a single Commercial Department that aligns the objectives of its various sales channels, with a special emphasis on providing a high-availability and convenient service, with the aim of reviving customer growth and managed funds. True to its commitment to providing its customers with improved information, CCBolsa developed the market depth as a new service during 2016.

CCBolsa provides market maker services to qualified and institutional customers, and currently offers this service to over 15 investment funds, as a complementary activity.

PRINCIPAL EVENTS IN 2016

CCBolsa achieved net income of Ch$7,994 million in 2016, generating an ROE of 19.1% based on its average equity for the year.

At the close of the period, CCBolsa was ranked seventh in the industry based on equity, with 5.6% of total broking equity. Likewise, it has 1.7 % of brokerage revenues, 4.9 % of revenues for services, 13.3% of profits and only 2.0% of expenses for the industry.

Therefore, CCBolsa was ranked at third by net income, and fourth by ROE in the industry.

STOCK MARKET CONTEXT

2016 was quite positive for Latin American stock exchanges. In particular, the IPSA ended the year with a return of 13.3% in pesos. The return in US dollars was 18.9%.

The volumes traded on the Santiago stock exchange grew by 15% compared to 2015, unlike previous years, but still 41% lower than in 2010. CCBolsa increased its traded volume by over 100%, and achieved a market share of 2.5% in this category. Furthermore, the Lipigas IPO was placed this year, leaving behind two years devoid of IPO transactions.

Commissions across the industry grew by 7.2% compared to 2015, but they were still 37% below 2010 commissions. CCBolsa was dedicated to driving up sales, and as a result its commissions increased by 39% compared to 2015, surpassing Ch$3 billion to reach 41% higher than commissions in 2010.


6.3

LARRAINVIAL ASSETMANAGEMENT ADMINISTRADORA GENERAL DE FONDOS S.A.

121

BUSINESS MANAGEMENT06 CHAP

.

Consorcio Financiero has a 25% stake in LVCC Asset Management, which owns 99.9% of LarrainVial Asset Management Administradora General de Fondos S.A., the largest non-banking asset manager in Chile, with over US$ 4 billion under management as of December 31, 2016.

LarrainVial Asset Management has a wide range of mutual and investment funds distributed amongst retail and institutional investors in Chile, Peru, Colombia and Europe, in equity, fixed income and balanced funds.

GROWTH IN A HIGHLY VOLATILE YEAR

2016 was a turbulent period for both the fixed income and variable income investment markets. International events such as Brexit, which was a national referendum in Great Britain that approved leaving the European Union, and the triumph of Donald Trump in the United States, led to periods of high volatility in global equity markets.

Even in this context, LarrainVial Asset Management maintained its steady performance and grew, due to its continual goal to capture the best investment opportunities in the Chilean and global financial markets, using a disciplined process, an experienced team, and constant monitoring and research.

The good results obtained by the departments at LarrainVial Asset Management enabled it to reach US$ 4 billion in assets managed in 2016, and remain the mutual fund manager with the most Chilean equities under management.

STRENGTHENING INVESTMENT FUNDS

The fastest growth at the asset manager in 2016 was driven by its Investment Funds, as this industry experienced an expansion of 54%. However, LarrainVial Asset Management grew by 132%, demonstrating its ability to quickly recognize business opportunities and respond to the needs of investors.

LarrainVial Asset Management launched five new investment funds in 2016, led by the Fondo Oportunidad Argentina (Argentinean Opportunity Fund) that captured opportunities following the election of President Macri, and the Fondo de Deuda Local (Local Debt Fund) that attracted Ch$ 100,000 million in Chilean fixed income investments.

It innovated in the private credit segment with an Invoice Investment Fund, and became assertive in understanding customer’s needs by participating in an asset class that is growing rapidly in Chile.

122

06 BUSINESS MANAGEMENT / 6.3 LVCC

CHAP

.

It innovated by using quantitative investment methods through its Fondo Mutuo Quant Latam, and created the first Chilean equities fund in Luxembourg, to attract foreign investors looking for exposure to the Chilean stock market. Finally, it created the first fund advised by the Swiss financial group Pictet, which provides access to the best Hedge Funds in the world using a local investment vehicle.

INTERNATIONAL RATING

The strength of LarrainVial Asset Management’s processes was again recognized. The international risk ratings agency, Standard & Poor’s (S&P), rated its asset management practices with the highest rating “AMP-1” (very strong) for the fourth consecutive year.

Standard and Poor’s considered the administrator’s strong competitive position, its broad diversification of products and customers, its experienced management team and clear corporate strategy, its significant operational and control practices, its well-structured investment management process, and its risk management capacity.

ALTAMAR

LVCC has a 16.8% stake in Altamar Capital Partners, which is an independent group of financial services, focused since its creation on providing institutional investors and high net worth individuals with access to the best international managers of alternative investments. Its focus is mainly on private equity, real estate, private debt, infrastructure and venture capital. The Altamar Group has a subsidiary, Altamar Advisory Partners, which advises on M&A transactions, merchant banking, stock market placings and debt restructuring.

The group was created in Spain in 2004 and currently has a team of over 100 professionals operating from offices in Madrid, Barcelona, Santiago de Chile and New York. Its assets under management total 3,500 million euros as of December 31, 2016, which is an increase of 40% over 2015.

123

US$4,000 MILLION

IN ASSETS MANAGEd IN 2016

132%GROWTh IN

INvESTMENT FUNdS IN 2016

2016 AWARDS

FIRST PLACE: PORTFOLIO LEAdER IN ThE MIxEd MOdERATE MUTUAL FUNd CATEGORy

ThIRd PLACE: LARRAINvIAL MUTUAL FUNd ACCIONES NACIONALES IN ThE ChILEAN EqUITy APv SERIES CATEGORy.

FIRST PLACE: LARRAINvIAL MUTUAL FUNd ENFOqUE IN ThE ChILEAN EqUITy APv SERIES CATEGORy.

SEGUNdO LUGAR:LARRAINvIAL MUTUAL FUNd ACCIONES NACIONALES IN ThE ChILEAN EqUITy APv SERIES CATEGORy.

MORNINGSTAR AWARdS

SALMON AWARdS

SALMON AWARdS APv

6.4LA POSITIVA VIDA SEGUROS Y REASEGUROS S.A. (PERU)

125

BUSINESS MANAGEMENT06 CHAP

.

126

Consorcio Financiero S.A. has a subsidiary, CF Inversiones Peru S.A.C., which owns 40.1% of La Positiva Vida Seguros y Reaseguros S.A. (La Positiva Vida), the fourth largest life insurance company in Peru. It provides life insurance, occupational accident insurance, pensions and retirement income insurance. It focuses on providing its customers with peace of mind through family protection solutions, by providing professional and understanding advice.

ECONOMIC CONTEXT IN 2016PERUVIAN ECONOMY IN 2016

The Peruvian economy led growth in South America, and achieved 18 years of uninterrupted growth. Economic expectations grew significantly after the first round of the presidential elections in April, which further improved after the second round. Therefore, GDP grew by 4% in 2016, which was mainly due to growth in metal mining, which increased by 21.7%, and increased copper production of 41.1%.

After four years of poor performance, the Lima Stock Exchange recorded a positive performance, to become the second most profitable in the world, with growth of 58.06%, driven by mining equities performing well and optimism following the Presidential elections.

The Peruvian sol closed the year at 3.3933 to the US dollar, an appreciation of 1.7%, after 3 consecutive years of currency depreciation. This local currency revaluation took place whilst the US dollar became volatile as a result of presidential elections in the United States. Improvements in the international price of metals, such as zinc and gold, led to a positive trade balance in Peru over the last few months of 2016. Therefore, the Peruvian Central Reserve Bank (BCRP) has maintained its reference rate at 4.25% since the last increase in February.

PERUVIAN INSURANCE MARKET IN 2016

In 2016, the Peruvian insurance market represented 1.9% of GDP, with life insurance representing 0.9% and general insurance 1.0%. Over the last five years, average growth in the insurance market has been 9.6% above GDP growth. This result is composed of average growth in the general insurance market of 10.2% and 8.9% in the life insurance market.

However, Congress proposed changes to the private pensions system that were approved by the Peruvian government during the first half of 2016. When members reach retirement age, this reform allows

them to choose between receiving a pension or withdrawing up to 95.5% of their available funds. This law is the most substantial reform to the pension system since it was launched at the beginning of the 1990s. This drastic decision in pension fund management significantly impacted the Peruvian insurance market during 2016.

In the second half of 2016, the new government formed a commission of specialists to propose a comprehensive reform of the pension system. Its recommendations are also expected to cover reforms related to the health system and employment contracts.

2016 ANNUAL REPORT CONSORCIO FINANCIERO06 BUSINESS MANAGEMENT / 6.4 LA POSITIVA VIDA

CHAP

.THE COUNTRY RISk SCORE WAS

162 POINTS, WHICH IS BELOW THE AVERAGE FOR LATIN

AMERICA AT 471 POINTS

PERUvIAN NET INTERNATIONAL RESERvES ARE EqUIvALENT TO

31.5% OF GdP

4%WAS THE INCREASE

IN GDP

3.23%WAS ANNUAL

INFLATION, ONE OF THE LOWEST IN

SOUTH AMERICA

PERUVIAN ECONOMY IN 2016

127

2011

EVOLUTION OF NET INSURANCE PREMIUMSOF INSURANCE MARKET

(IN MILLIONS OF US DOLLARS)

2012

2013

2014

2015

2016

7,212

7,906

9,069

10,154

11,744

11,256

MARKET

INSU

RA

NC

EG

ENER

AL

VID

A

-4.2%

VARIATION IN NET INSURANCEPREMIUMS PER TYPE OF MARKET

(IN PERCENTAGE - %)

LA POSITIVAGROUP -12.4%

MARKET 0.3%


MERCADO -9.0%


2011

2013

2014

2015

2016

EVOLUTION OF NET INSURANCEPREMIUMS PER TYPE OF MARKET

(IN MILLIONS OF US DOLLARS)

2012

GENERAL

LIFE 3,805

4,230

4,885

5,225

6,126

6,143

3,407

3,676

4,184

4,929

5,618

5,113

GENERALINSURANCE

MARKET54.6%

45.4%

US$ 3,317MILLION

DISTRIBUTION OF PREMIUMS PER TYPE OF MARKET(IN MILLIONS OF US DOLLARS)

54.6%

LIFEINSURANCE

MARKET45.4%

At the end of 2016, premiums on the Peruvian insurance market were worth US$ 3,317 million, a reduction of 4.2% compared to the previous year. General insurance premiums grew by 0.3% to reach US$ 1,810 million (54.58% of the total insurance market), and life insurance premiums fell by 9.0% to total only US$ 1,507 million (45.42% of the total insurance market).

The life insurance market was affected by changes to the Peruvian pension system during 2016, and premiums fell by 9.0%, a fall of US$ 149 million. The main segment affected by this change was Retirement Income. In 2015, it represented 27% of total life insurance premiums, and in 2016 this fell to 12%. This resulted in premiums falling by US$ 268 million, a decrease of 59.1% compared to 2015. However, the remaining segments grew significantly compared to the previous year : Loan repayment protection insurance premiums grew by US$ 33.3 million, an increase of 11.8%, and Individual Life premiums grew by US$ 32.7 million, an increase of 15.2%.

CORPORATE STRUCTURE OF LA POSITIVA VIDA

La Positiva Vida has implemented Corporate Governance that designs and manages the regulations, structures and processes that carefully manage the organization, based on the principles of accountability and transparency. It also secures sustainable value creation for the benefit of shareholders, customers, employees and other stakeholders.

Its Corporate Governance has evolved over the past year, with the aim of strengthening the comprehensive management of its core businesses, and focuses on transforming the organization. Therefore, the Executive Committees were redefined by the Board and divided into 6 analysis and decision-making Committees, these are: Strategic planning committee, LPV commercial committee, LPG commercial committee, technology committee, corporate commercial committee and legal committee.

128

2016 ANNUAL REPORT CONSORCIO FINANCIERO06 BUSINESS MANAGEMENT / 6.4 LA POSITIVA VIDA

CHAP

.

BUSINESS MANAGEMENT IN 2016

GROWTH IN A YEAR OF CHANGES

La Positiva Vida collected premiums totaling US$ 153.8 million, a fall of 13.9% compared to 2015. This was a result of the private pension reforms in Peru. The segments that impacted these results were: Retirement income premiums fell by US$ 38.6 million compared to 2015, a decrease of 61.1%, and survivor pension premiums fell by US$ 2.4 million compared to 2015, a decrease of 12.2% However, the remainder of the company achieved positive results, with significant growth in the loan repayment protection business where premiums grew by US$ 6.7 million, an increase of 60.1%, Invalidity pension business where premiums were US$ 3.3 million, an increase of 23.4%, Pension business where premiums were US$2.4 million, an increase of 6.5%, and Occupational risks where premiums were US$ 2.2 million, an increase of 10.9%. Therefore, La Positiva Vida achieved a market share of 10.2% to stay in fourth place within the Peruvian life insurance market.

Assets at La Positiva Vida were US$ 1,005 million at the end of 2016, an increase of US$ 103.7 million with respect to 2015, which represents an increase of 11.5%. Equity at La Positiva Vida was US$ 118 million, an increase of US$ 24.2 million, which represents an increase of 26%. Finally, net income at La Positiva Vida was US$ 8.3 million for 2016, which represents 5.3% of premiums and an increase of 34% compared to the previous year.

ANNUITIES

The annuities business has enjoyed average growth over the last five years of 9%. However, it fell by 39% last year, closing with premiums of US$58.9 million. This was a result of the private pension reforms in Peru, and represented a reduction in premiums of US$ 37.7 million with respect to 2015 for La Positiva Vida. The segment that was most affected within the annuities business was retirement income with a fall of 61% and a decrease in premiums of US$ 38.6 million.

LOAN REPAYMENT PROTECTION

2016 was a good year for the loan repayment protection segment, due to strong growth of 60.1%, with an increase in premiums of US$ 6.7 million compared to 2015. This generated premiums of US$ 18 million by the end of the year, which represented 11.7% of the company’s premiums, whereas these were only 6.3% in 2015. This segment grew the most within all La Positiva Vida’s businesses.

INDIVIDUAL LIFE

The individual life segment has enjoyed the greatest dynamism and average growth over the past five years, with a growth rate of 41%. The company’s market share grew from 0.9% in 2011 to 2.6% in 2016. However, individual life business is new to the company, as it represents only 4% of total revenue, nevertheless, it is a critical business for La Positiva Vida and it recently began to be managed through both commercial departments, with the aim of increasing the company’s market share.

BURIAL INSURANCE

Burial insurance is a business that generates a high return, with a technical margin of 50% in 2016. This segment represents 4.8 % of the company’s premiums, and grew by 4% compared to 2015. It is marketed by brokers, non-traditional channels and La Positiva Vida’s own sales force. At the end of 2016, the company’s share of the burial insurance segment was 18.2%.

SUPPLEMENTARY RISK INSURANCE

Supplementary risk insurance is the second largest segment in the company and has enjoyed the greatest dynamism over the past five years, with an average growth rate of 30%. However, 2016 has been a tough year, due to almost no market growth, with this segment increasing by only 0.6% in 2016. However, La Positiva Vida overcame this scenario and achieved growth of 8%, to reach premiums of US$ 16.2 million. The segment represented 8.4% of total company premiums in 2015, which had increased to 10.6% and a market share of 14.4% by the end of 2016.

LIFE LAW

Life law is a segment that has been affected by low growth in the market, and total premiums fell by 0.1% compared to 2015. However, La Positiva Vida grew this business by 19% and by the end of the year premiums were US$5.9 million. This strong growth was mainly driven by capturing State accounts, which helped to achieve a market share of 13.0%.

129

SISCO

The pension business, SISCO, is regulated by the State through a tender, which divides the pension business into 7 components, and most of the Life Insurance companies compete for this business. La Positiva Vida won a component of this tender for a period of two years. This business represented 18.2% of the company’s premiums in 2016.

MAJOR STRATEGIC CHALLENGES IN 2016

The strategies implemented by La Positiva Vida during 2016 focused on improving processes, on strengthening commercial management and replacing lost premium income following the decrease in the annuities market, on technological renewal to sustain the organization, and on regulatory projects. Throughout the year seven strategic projects were developed, which involved over 19,000 man-hours and over 60 employees at La Positiva Vida.

La Positiva Vida held its leadership position in the provinces throughout 2016, occupying first place

in “Top of Mind” at Arequipa, Trujillo, Huancayo and Tacna. It is ranked among the top three

companies by brand recall across Peru..Source: Brand Tracking Research by Arellano Marketing 2016.

100 YEARS OF TRADITIONAND SECURITY

to give you peace of mind from having your future and that of your family in the best of hands... supporting you through all

stages of life

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07FINANCIALSTATEMENTS

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FINANCIAL STATEMENTS2016 ANNUAL REPORT CONSORCIO FINANCIERO

INDEPENDENT AUDITOR’S REPORT

Santiago, March 29, 2017

Dear Shareholders and Directors Consorcio Financiero S.A.,

We have audited the attached Consolidated Financial Statements of Consorcio Financiero S.A. and subsidiaries, which comprise consolidated financial position statements as of December 31, 2016 and 2015 and the related consolidated statements of net income, comprehensive income, changes in equity, and cash flows for the years then ended, and the corresponding notes to the consolidated financial statements.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with instructions and standards for the preparation and presentation of financial information issued by the Chilean Securities and Insurance Supervisor as described in Note 2 to the consolidated financial statements. This responsibility includes designing, implementing and maintaining internal control relevant for the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We have not audited the financial statements as of December 31, 2015 for the subsidiaries, Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., CN Life Compañía de Seguros de Vida S.A. and Compañía de Seguros Generales Consorcio Nacional de Seguros S.A., which represent 66% of the assets and 66% of the liabilities of Consorcio Financiero S.A. and subsidiaries as of this date. These financial statements were audited by other auditors whose reports have been furnished to us and our opinion, insofar as it relates to the amounts included for the subsidiaries above, is based solely on the reports of such other auditors. We conducted our audits in accordance with auditing standards generally accepted in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance that the consolidated financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement in the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls relevant for the preparation and fair presentation of the consolidated financial statements of the entity with the aim of designing auditing procedures appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

PwC Chile, Av. Andrés Bello 2711 – floor 5, Las Condes — Santiago, ChileChilean ID Number: 81.513.400-1 Telephone: (56 2) 2940 0000 www.pwc.cl

133

Santiago, March 29, 2017, Consorcio Financiero S.A.

2

Accordingly, we do not express such an opinion. An audit also includes evaluating the accounting policies used and the reasonableness of significant accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, based on our audits and on the reports prepared by other auditors, the consolidated financial statements referred to above present fairly in all material aspects the financial position of Consorcio Financiero S.A. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and cash flows for the years then ended, in accordance with accounting standards and instructions for the preparation and presentation of financial information, issued by the Chilean Securities and Insurance Supervisor (SVS), as described in Note 2.

Accounting basis

The consolidated financial statements of Consorcio Financiero S.A. and subsidiaries have been prepared by Management on the basis of the preparation and presentation of financial information as described in note 2, which is different to International Financial Reporting Standards, as the consolidation scope includes Banco Consorcio and subsidiaries whose financial statements are prepared in accordance with the accounting standards issued by the Chilean Banks and Financial Institutions Supervisor (SBIF), and the subsidiaries, Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., CN Life Compañía de Seguros de Vida S A., Compañía de Seguros Generales Consorcio Nacional de Seguros S.A., whose financial statements are prepared in accordance with new accounting standards and instructions issued by the Chilean Securities and Insurance Supervisor. This matter does not change our opinion.

Chilean ID Number: 22.216.857-0

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As of December 31, 2016 and 2015

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

CONSOLIDATED NET INCOME STATEMENT

For the years ended December 31, 2016 and 2015

The accompanying notes numbered 1 to 37 are an integral part of these consolidated financial statements.

NOTE12-31-2016

ThCh$12-31-2015

ThCh$NET INCOMEIncome from ordinary activities 25 1,437,772,889 1,187,575,343Cost of sales 25 (1,101,083,121) (989,996,998)GROSS PROFIT 336,689,768 197,578,345

Other income 25 8,108,090 6,797,782Administration expenses 26 (109,717,249) (87,364,952)Other expenses, by function 25 (21,182,595) (18,271,143)PROFIT FROM OPERATIONAL ACTIVITIES 213,898,014 98,740,032

Share of profits at associates and joint ventures accounted for using the equity method

5,714,702 5,693,288

Exchange differences (22,636,899) 41,344,460Losses on indexation (29,634,417) (43,542,204)PROFIT (LOSS) BEFORE TAX 167,341,400 102,235,576Expense for income tax (30,179,948) (14,046,840)PROFIT FROM CONTINUED OPERATIONS 137,161,452 88,188,736NET INCOME 137,161,452 88,188,736

PROFIT ATTRIBUTABLE TOShareholders of the parent company 137,144,020 88,186,002Minority interests 17,432 2,734NET INCOME 137,161,452 88,188,736

Basic earnings per shareBasic earnings per share on continued operations 29 1,001.40 701.72BASIC EARNINGS PER ShARE 1,001.40 701.72

NOTE12-31-2016

ThCh$12-31-2015

ThCh$ASSETSCash and cash equivalents 6 33,324,241 73,466,833Current tax accounts receivable 7 8,781,776 10,580,849Related party receivables 8 23,469,278 18,593,388Other non-financial assets 9 78,517,039 111,387,302Trade and other receivables 10 2,380,446,629 2,083,095,054Other financial assets 11 6,374,052,859 5,548,140,294Deferred tax assets 12 67,215,755 71,963,694Investments accounted for using the equity method 13 92,817,012 93,534,319Intangible assets other than goodwill 14 4,130,044 3,858,159Goodwill 15 7,922,880 7,380,177Property investments 16 422,189,570 370,895,082Property, plant and equipment 17 27,575,270 29,343,034

TOTAL ASSETS 9,520,442,353 8,422,238,185

LIABILITIES AND EQUITYLIABILITIESRelated party payables 8 411,786 3,944,100Current tax liabilities 18 8,422,474 7,572,618Other non-financial liabilities 19 79,630,731 86,401,319Trade and other payables 20 5,257,870,089 4,681,470,443Deferred tax payable 12 58,053,131 48,793,391Other financial liabilities 21 3,150,617,009 2,841,646,427Provisions for employee benefits 22 11,822,099 10,143,889Other provisions 23 42,950,740 27,564,445

TOTAL LIABILITIES 8,609,778,059 7,707,536,632

EQUITYIssued capital 24 288,141,592 194,358,392Retained earnings 631,565,783 553,383,000Other reserves 24 (9,887,412) (33,607,595)

Equity attributable to shareholders of the parent company

909,819,963 714,133,797

Minority interests 844,331 567,756

TOTAL EQUITY 910,664,294 714,701,553

TOTAL LIABILITIES AND EQUITY 9,520,442,353 8,422,238,185

135

For the years ended December 31, 2016 and 2015 For the years ended December 31, 2016 and 2015

CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

CONSOLIDATED CASH FLOW STATEMENT


12-31-2016ThCh$

12-31-2015ThCh$

Net income 137,161,452 88,188,736

COMPONENTS OF OThER COMPREhENSIVE INCOME, BEFORE TAXESProfit (loss) from exchange differences on conversion, before taxes

(1,912,122) (904,729)

Profit (loss) from revaluations of financial assets available-for-sale, before tax

47,758,126 (27,485,970)

Income tax related to componentsof other comprehensive incomeIncome tax related to financial assetsavailable for sale in other comprehensive income (9,224,059) 7,414,837Total income tax related to componentsof other comprehensive incomeOThER COMPREhENSIVE INCOME (LOSS) 36,621,945 (20,975,862)TOTAL COMPREhENSIVE INCOME 173,783,397 67,212,874

COMPREhENSIVE INCOME ATTRIBUTABLE TOShareholders of the parent company 173,765,965 67,210,140

Minority interests 17,432 2,734

TOTAL COMPREhENSIVE INCOME 173,783,397 67,212,874

12-31-2016ThCh$

12-31-2015ThCh$

PROCEEDS FROM OPERATING ACTIVITIESProceeds from the sale of goods and services 1,599,062 289,548Proceeds from royalties, fees, commissions and other income from ordinary activities 65,595,822 42,382,250Proceeds from contracts held for brokerage or trading purposes 13,276,949 19,362,297Proceeds from premiums and claims, annuities and other benefits arising on policies underwritten

842,758,635 799,165,032

Proceeds from other operating activities 44,060,258 14,725,823PROCEEDS FROM OPERATING ACTIVITIES 967,290,726 875,924,950

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (132,468,653) (126,109,403)Payments arising from contracts held for brokerage or trading (336,905,214) (140,989,619)Payments to and on behalf of employees (1,428,877) (1,429,288)Payments for premiums and claims, annuities and other obligations arising on policies underwritten

(520,111,981) (526,735,741)

Payments for other operating activities (19,481,483) (8,880,845)PAYMENTS FOR OPERATING ACTIVITIES (1,010,396,208) (804,144,896)

OThER PROCEEDS FROM (PAYMENTS FOR) OPERATIONSDividends received 10,866,731 17,503,599Interest paid (12,790,493) (12,532,722)Interest received 21,877,975 14,559,222Income taxes paid (refunded) (22,665,619) (18,938,517)OThER PROCEEDS FROM (PAYMENTS FOR) OPERATIONS (2,711,406) 591,582

NET PROCEEDS FROM (PAYMENTS FOR) OPERATING ACTIVITIES (45,816,888) 72,371,636

Cash flows from the loss of control of subsidiaries or other businesses - 16,141,398Cash flows used to obtain control of subsidiaries or other businesses (147,676) -Cash flows used to acquire minority interests - (36,226,562)Loans to related companies (268,490) -Proceeds from the sale of property, plant and equipment 261,269 450Acquisitions of property, plant, and equipment (2,371,863) (1,811,545)Acquisitions of intangible assets (830,164) (404,185)Proceeds from other long-term assets 165,694,734 252,420,272Acquisition of other long-term assets (183,307,166) (274,162,862)Dividends received 155,292 141,089Other proceeds (payments) 3,122 -

PROCEEDS FROM (PAYMENTS FOR) INVESTING ACTIVITIES (20,810,942) (43,901,945)

PROCEEDS FROM (PAYMENTS FOR) FINANCING ACTIVITIESProceeds from share issues 93,784,330 -Proceeds from long-term loans - 32,051,597Proceeds from short-term loans (38,762) 41,927Loans from related companies 1,030,533 416,123Loan repayments 33,923 (891,918)Loans to related companies (11,801,614) (6,502,586)Dividends paid (44,176,039) (50,051,500)Interest paid (19,205,805) (999,521)

PROCEEDS FROM (PAYMENTS FOR) FINANCING ACTIVITIES 19,626,566 (25,935,878)

Effect of exchange rate fluctuations on cash and cash equivalents 218,931 (1,019)Net increase (decrease) in cash and cash equivalents (46,782,333) 2,532,794Cash and cash equivalents at the start of the period 88,373,978 85,841,184CASh AND CASh EQUIVALENTS AT ThE END OF ThE PERIOD 41,591,645 88,373,978

136

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AP.



CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


CAPITAL ISSUEDThCh$

RESERVES FOR

EXChANGE VARIANCES

ON CONVERSION

ThCh$

RESERVES FOR CASh

FLOW hEDGESThCh$

RESERVES FOR PROFITS OR LOSSES

ON DEFINED BENEFIT PLANSThCh$

RESERVES FOR PROFITS OR

LOSSES ON ThE REVALUATION OF FINANCIAL

ASSETSThCh$

VARIOUS OThER

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$

EQUITY ATTRIBUTABLE TO

ShAREhOLDERS OF ThE PARENT

COMPANYThCh$

MINORITY INTERESTS

ThCh$EQUITYThCh$

BALANCE AS OF JANUARY 1, 2016 194,358,392 (685,585) - - (25,397,842) (7,524,168) (33,607,595) 553,383,000 714,133,797 567,756 714,701,553Capital increase 93,783,200 - - - - - - -93,783,200 - 93,783,200Net income for the period - - - - - - - 137,144,020 137,144,020 17,432 137,161,452Other comprehensive income - (1,912,122) - - 38,534,067 - 36,621,945 - 36,621,945 - 36,621,945TOTAL COMPREhENSIVE INCOME - (1,912,122) - - 38,534,067 - 36,621,945 137,144,020 173,765,965 17,432 173,783,397Capital increase - - - - - - - - - - -Dividends - - - - - - - (44,092,927) (44,092,927) - (44,092,927)Distribution to shareholders - - - - - - - (14,868,310) (14,868,310) - (14,868,310)Other increases (decreases) - - - - - (12,901,762) (12,901,762) - (12,901,762) 259,143 (12,642,619)

TOTAL ChANGES 93,783,200 (1,912,122) - - 38,534,067 (12,901,762) 23,720,183 78,182,783 195,686,166 276,575 195,962,741BALANCE AS OF DECEMBER 31, 2016 288,141,592 (2,597,707) - - 13,136,225 (20,425,930) (9,887,412) 631,565,783 909,819,963 844,331 910,664,294

CAPITAL ISSUEDThCh$

RESERVES FOR

EXChANGE VARIANCES

ON CONVERSION

ThCh$

RESERVES FOR CASh

FLOW hEDGESThCh$

RESERVES FOR PROFITS OR LOSSES

ON DEFINED BENEFIT PLANSThCh$

RESERVES FOR PROFITS OR

LOSSES ON ThE REVALUATION OF FINANCIAL

ASSETSThCh$

VARIOUS OThER

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

MINORITY INTERESTS

ThCh$EQUITYThCh$

BALANCE AS OF JANUARY 01, 2015 194,358,392 219,144 - - (5,326,709) (2,202,159) (7,309,724) 507,266,437 694,315,105 477,233 694,792,338

CAPITAL INCREASE - - - - - - - - - -PROFIT FOR THE PERIOD - - - - - - - 88,186,002 88,186,002 2,734 88,188,736OTHER COMPREHENSIVE INCOME - (904,729) - - (20,071,133) - (20,975,862) - (20,975,862) - (20,975,862)TOTAL COMPREhENSIVE INCOME - (904,729) - - (20,071,133) - (20,975,862) 88,186,002 67,210,140 2,734 67,212,874CAPITAL INCREASE - - - - - - - - - - -DIVIDENDS - - - - - - - (50,000,000) (50,000,000) - (50,000,000)DISTRIBUTION TO SHAREHOLDERS - - - - - - - 7,930,561 7,930,561 - 7,930,561OTHER INCREASES (DECREASES) - - - - - (5,322,009) (5,322,009) - (5,322,009) 87,789 (5,234,220)

TOTAL ChANGES - (904,729) - - (20,071,133) (5,322,009) (26,297,871) 46,116,563 19,818,692 90,523 19,909,215BALANCE AS OF DECEMBER 31, 2015 194,358,392 (685,585) - - (25,397,842) (7,524,168) (33,607,595) 553,383,000 714,133,797 567,756 714,701,553

137

As of december 31, 2016 and 2015

NOTE 1 - CORPORATE INFORMATION

1.1. INFORMATION ON ThE COMPANY AND ITS SUBSIDIARIES Consorcio Financiero S.A. (hereinafter “the Company” or “Consorcio”) is the owner of the group and was formed by public deed on January 16, 1986 under the name B.T. (Pacific) Limited y Compañía Limitada. Its business purpose is the development and exploitation of investments and businesses in movable or immovable property and any other directly or indirectly related activity.

On May 26, 1999, its informal and legal name was changed by public deed to P&S - Banvida Pacífico Limitada. On September 29, 1999, its legal name was changed by public deed to “Consorcio Financiero S.A.” and it was converted from a private company to a public company.

The company was registered in the Securities Register as 1103 on March 20, 2013 under the inspection of the Chilean Securities and Insurance Supervisor (SVS).

The companies included in these consolidated financial statements as of December 31, 2016 are the following:

ChILEAN ID NUMBER COMPANY COUNTRY

FUNCTIONAL CURRENCY DIRECT INTEREST INDIRECT TOTAL

99.012.000-5 COMPAÑÍA DE SEGUROS DE VIDA CONSORCIO NACIONAL DE SEGUROS S.A. CHILE CHILEAN PESOS 99.90% - 99.90%96.579.280-5 CN LIFE COMPAÑÍA DE SEGUROS DE VIDA S.A. CHILE CHILEAN PESOS 16.72% 83.28% 100.00%99.500.410-0 BANCO CONSORCIO AND SUBSIDIARIES CHILE CHILEAN PESOS 67.80% 32.20% 100.00%

96.654.180-6COMPAÑÍA DE SEGUROS GENERALES CONSORCIO NACIONAL DE SEGUROS S.A.

CHILE CHILEAN PESOS 99.99% 0.01% 100.00%

FOREIGN CF CAYMAN.CAYMAN ISLANDS

CHILEAN PESOS 99.99% 0.01% 100.00%

76.155.778-5 CONSORCIO INVERSIONES FINANCIERAS SPA CHILE CHILEAN PESOS 100.00% - 100.00%96.989.590-0 CONSORCIO SERVICIOS S.A. CHILE CHILEAN PESOS 99.50% 0.50% 100.00%96.983.020-5 CONSORCIO INVERSIONES LIMITADA CHILE CHILEAN PESOS 99.99% 0.01% 100.00%78.008.540-5 CONSORCIO INVERSIONES DOS LTDA. CHILE CHILEAN PESOS 99.99% 0.01% 100.00%99.525.220-1 INMOBILIARIA PUNTA PITE S.A. CHILE CHILEAN PESOS - 100.00% 100.00%76.098.056-0 INMOBILIARIA LOTE 18 S.A. CHILE CHILEAN PESOS - 84.40% 84.40%76.098.056-0 CONST. E INMOB.PRESIDENTE RIESCO S.A. CHILE CHILEAN PESOS - 84.40% 84.40%FOREIGN CF INVERSIONES PERÚ S.A.C. PERU PERUVIAN SOL 99.99% 0.01% 100.00%76.515.767-6 INVERSIONES CONTINENTAL BIO BIO SPA CHILE CHILEAN PESOS - 60.00% 60.00%

The operations of Consorcio and subsidiaries and their main activities are described in Note 5 to the consolidated financial statements.

ShAREhOLDERSChILEAN ID

NUMBER ShARES % ACCUMULATED %BANVIDA S.A. 96.882.560-7 57,551,628 42.0 42.0P&S S.A. 96.816.350-7 57,551,628 42.0 84.0IFC 59.120.060-7 8,057,902 5.8 89.9BP S.A. 96.904.900-7 7,677,553 5.6 95.5CALVERTON SPAIN S L 59,220,560-2 3,223,161 2.4 97.9EL BOSQUE FIP 76.246.548-5 1,445,096 1.1 98.9TOBALABA FIP 76.246.552-3 1,445,095 1.1 100.0

136,952,063 100.0

The financial statements of subsidiaries are consolidated line by line with Consorcio Financiero S.A. Consequently, all balances and significant transactions between them are eliminated on consolidation.

The consolidation of Insurance Companies and Banco Consorcio and subsidiaries has required the use of financial statements prepared on the basis of specific accounting principles issued by the Chilean Securities and Insurance Supervisor and the Chilean Banks and Financial Institutions Supervisor, respectively.

The information contained in these Consolidated Financial Statements is the responsibility of the Company’s Board of Directors, and they were approved at the Board meeting held on March 29, 2017.

The Company’s risk rating is the following:

RISK RATING AGENCY NAME

RISK RATING AGENCY ID

NUMBER REGISTRY NUMBER ITEM RISK RATING RATING DATE

Fitch Chile Clasificadora de Riesgo Limitada 79.836.420-0 1Bonds Type A Bonds Type B Solvency

AA-AA-AA-

9-30-2016

Feller-Rate Clasificadora de Riesgo Limitada 79.844.680-0 9Bonds Type A Bonds Type B Solvency

AAAAAA

10-28-2016

The external auditors of the parent company are Pricewaterhouse Coopers Consultores, Auditores y Compañía Limitada.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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1.2. FIRST ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS.

a) Consorcio Financiero S.A. and subsidiaries (except for Insurance Companies and Banco Consorcio and subsidiaries).

The financial statements of Consorcio Financiero S.A., CF Cayman Ltd., Consorcio Inversiones Financieras SpA, Consorcio Servicios S.A., Consorcio Inversiones Limitada, Consorcio Inversiones Dos Ltda., Inmobiliaria Lote 18 S.A. and Inmobiliaria Punta Pite as of December 31, 2016 were prepared in accordance with International Financial Reporting Standards (IFRS).

b) Insurance (Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., CN Life Compañía de Seguros de Vida S.A., Compañía de Seguros Generales Consorcio Nacional de Seguros S.A.)

Insurance companies that adopt IFRS as of January 1, 2012 are required by the Chilean Securities and Insurance Supervisor (SVS) in Circular 2022 dated May 17, 2011 (and subsequent amendments) to ensure that the prudent criteria of the Supervisor prevails over IFRS where they disagree.

c) Bank and subsidiaries

On November 9, 2007, the Chilean Banks and Financial Institutions Supervisor issued the new “Compendium of Accounting Standards” that contains the standards of accounting and reporting for banks, which became effective on January 1, 2009.

NOTE 2 - BASIS OF PREPARATION

The preparation of the Consolidated Financial Statements as of December 31, 2016 required that Management has used its best knowledge and understanding in the process of applying standards and interpretations to the facts and circumstances, although they may be subject to change. For example, amendments to existing standards and additional interpretations may be issued by the International Accounting Standards Board (IASB) that can change the current standard, as well as standards and specific instructions issued by the Chilean Securities and Insurance Supervisor and the Chilean Banks and Financial Institutions Supervisor.

2.1 CONSOLIDATION OF ThE FINANCIAL STATEMENTSThe preparation of the Consolidated Financial Statements includes all those companies where Consorcio owns directly or indirectly more than 50% of voting rights. It also includes those companies where Consorcio has effective control without taking into consideration its percentage of voting rights in those companies. IFRS 10 defines a controlling interest as one where an investor has exposure or rights to variable returns from its involvement, and the ability to affect those returns through its power over the company controlled.

The financial statements of subsidiaries are consolidated line by line with Consorcio Financiero S.A. Consequently, all balances and significant transactions between them are eliminated on consolidation. The participation of third parties in the equity of consolidated companies is presented under the heading “Minority interests” in the consolidated financial position statement, within total equity. Also, the participation of third parties in net income for the period is presented under the heading “Profit attributable to minority interests” in the consolidated comprehensive income statement and in the statement of changes in equity.

As already mentioned the Consolidated Financial Statements as of December 31, 2016 include Banco Consorcio and subsidiaries whose financial statements were prepared in accordance with the accounting standards issued by the Chilean Banks and Financial Institutions Supervisor (SBIF), and insurance companies whose financial statements were prepared in accordance with the accounting standards and instructions issued by the Securities and Insurance Supervisor (SVS).

2.2 ACCOUNTING PERIODThese Consolidated Financial Statements include:

- Consolidated statements of financial position as of December 31, 2016 and 2015.

- Consolidated net income and comprehensive income statements for the years ended December 31, 2016 and 2015.

- Statements of changes in equity for the years ended December 31, 2016 and 2015.

- Consolidated statements of cash flows for the years ended December 31, 2016 and 2015.

- Notes to the consolidated financial statements

139

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these consolidated financial statements are described below.

3.1. GENERAL CRITERIA APPLICABLE TO ALL COMPANIES

3.1.1 Cash and cash equivalents

These are cash balances and bank current accounts. In addition, very short-term investments used in the normal management of surplus cash are regarded as cash and cash equivalents.

3.1.2 Functional Currency

Consorcio Financiero S.A. and subsidiaries have defined the Chilean peso as their functional currency.

3.1.3 Foreign currency transactions and balances

Transactions in different currencies to the functional currency are considered foreign currencies and are initially registered at the exchange rate to the functional currency at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate to the functional currency at the period end. All exchange rate differences are recorded as a charge or credit to net income. The statements of net income expressed in foreign currency are converted at the monthly exchange rate of the functional currency.

3.1.4 Current taxes & deferred taxes

The current and deferred taxes are recognized as income or expenses and included in the net profit or loss for the period, except when they arise from a transaction that has been directly recognized in equity, in which case they are initially recorded as a charge or credit to equity, as in the case of the adjustments arising on first adoption of IFRS, in accordance with IFRS 1.

Deferred tax assets and liabilities are recognized on the estimated future tax effects attributable to temporary differences between the book values of assets and liabilities and their tax values. Deferred tax assets and liabilities are measured on the basis of the tax rate applicable for the year in which those assets and liabilities are cleared or liquidated. The effects of changes in tax legislation or in tax rates are recognized in deferred taxes from the date on which the law approving those changes was published.

Financial statements have been prepared under the criteria of historic cost, although modified for the fair value appraisal of certain financial instruments.

The preparation of financial statements in accordance with the aforementioned instructions requires certain critical accounting estimates to be made. It also requires Management to exercise its judgment when implementing the Company’s accounting policies.

3.1.5 Earnings per Share

The basic earnings per share is calculated by dividing the profit attributable to the shareholders of the parent company by the monthly weighted average of the Company’s issued shares.

The Company’s diluted earnings per share was the same as its basic earnings per share.

As of December 31, 2016, there are no potential effects on issued shares.

3.1.6 Minimum dividends

The Company has a provision for minimum dividends equivalent to 30% of the net income for the period.

3.1.7 Estimates and judgments

Preparing consolidated financial statements requires that the Company’s management makes judgments, estimates and assumptions that affect the application of accounting policies and the amounts of assets, liabilities, income and expenses presented. Real results could differ from these estimated amounts.

Estimates and assumptions are reviewed regularly by the management of the companies, in order to quantify some of their assets, liabilities, income, expenses and uncertainties. Changes in accounting estimates are recognized in the period in which the estimates are revised and in any future period affected.

In particular, the most significant areas where estimates and critical judgments by management have affected the implementation of accounting policies, and consequently the amounts reported in the financial statements, are as follows:

- The useful lives of physical and intangible assets

- Provisions

- Current taxes & deferred taxes

- The fair value of assets and liabilities

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3.1.8 Trade and other receivables

Trade and other receivables include the main debtors related to the business of each segment described in Note 5.

3.1.9 Goodwill

Goodwill represents the excess of the acquisition cost of a business combination over the Company’s share in the fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary at the acquisition date. It is accounted for at cost, less accumulated impairment losses. Goodwill generated on the acquisitions of joint ventures is included in the book value of the investment.

Goodwill generated on the acquisitions of joint ventures is evaluated for impairment as part of the investment, when there are indications that the value of the investment could be impaired.

An impairment loss is recognized for the amount by which the book value of the cash-generating unit exceeds its recoverable value, where this is the higher of the fair value of the cash-generating unit less sale costs, and its value in use.

An impairment loss is first assigned to goodwill to reduce its book value, and then to other assets of the cash-generating unit. Recognized impairment losses are not reversed in subsequent periods.

3.1.10 Other non-financial assets

These are all the items that are not defined in Appendix A of IFRS 9.

3.1.11 New Accounting Pronouncements

The following new standards and interpretations have been adopted in these financial statements.

NEW IFRS MANDATORY APPLICATION DATEIFRS 14 Regulatory Deferral Accounts Annual periods beginning on or after July 1, 2016.

AMENDMENTS TO IFRS MANDATORY APPLICATION DATEIAS 19, Employee benefits - Defined benefit plans: Employee contributions Annual periods beginning on or after July 1, 2014IFRS 11, Joint arrangements Annual periods beginning on or after May 1, 2014IAS 16, Property, plant and equipment, and IAS 38 Intangible assets Annual periods beginning on or after May 1, 2014IAS 16, Property, plant and equipment and IAS 41, Agriculture Annual periods beginning on or after June 1, 2014IAS 27, Separate financial statements Annual periods beginning on or after August 1, 2014IFRS 10, Consolidated financial statements and IAS 28, Investments in associates and joint ventures Annual periods beginning on or after December 1, 2014IFRS 10, Consolidated financial statements and IAS 28, Investments in associates and joint ventures Annual periods beginning on or after September 1, 2014IAS 1, Presentation of financial statements Annual periods beginning on or after December 1, 2014Annual improvements Cycle 2014 - improvements to two IFRS and two IAS Annual periods beginning on or after September 1, 2014.

The application of these standards has not had a significant impact on the amounts reported in these consolidated financial statements, but may affect the accounting of future transactions or agreements.

New and Revised IFRS Issued but not yet Effective:

NEW IFRS MANDATORY APPLICATION DATEIFRS 9, Financial instruments Annual periods beginning on or after January 1, 2018IFRS 15, Revenue from contracts with customers Annual periods beginning on or after January 1, 2018IFRS 16, Leases Annual periods beginning on or after January 1, 2019IFRIC 22, Transactions in foreign currency and advance payments Annual periods beginning on or after January 1, 2018

AMENDMENTS TO IFRS MANDATORY APPLICATION DATEIAS 7, Statement of cash flow Annual periods beginning on or after January 1, 2017IFRS 2, Share-based payments Annual periods beginning on or after January 1, 2018IAS 12, Income tax Annual periods beginning on or after January 1, 2017IFRS 15, Revenue from contracts with customers Annual periods beginning on or after January 1, 2018IFRS 4, Insurance contracts Annual periods beginning on or after January 1, 2018IFRS 1, First-time adoption Annual periods beginning on or after January 1, 2018IAS 40, Investment property Annual periods beginning on or after January 1, 2018IFRS 12, Disclosure of interests in other entities Annual periods beginning on or after January 1, 2017IAS 28, Investments in associates and joint ventures Annual periods beginning on or after January 1, 2018

Management does not expect that the standards, amendments and interpretations described above will have a material impact on the financial statements of the Group when they are adopted after December 31, 2016.

3.2 CONSORCIO FINANCIERO S.A. AND SUBSIDIARIES (EXCEPT INSURANCE COMPANIES, BANK AND SUBSIDIARIES)

3.2.1 Assets at fair value

All group companies apply IFRS 9 when classifying and measuring their financial assets and liabilities, with the exception of the bank, which applies IAS 39 as required by its regulator.

Financial assets that do not qualify to be valued at amortized cost, are measured at fair value with changes taken to net income.

The fair value of an asset on a given date is the amount for which that asset could be exchanged on that date between independent, knowledgeable, willing parties in an arm’s length transaction. The most common and objective reference to the fair value of an asset is the price paid in an organized

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and transparent market (“quoted price” or “market price”). A market is active when quoted prices are readily and regularly available, produced on an independent basis and represent actual transactions.

When no market price exists, the fair value of an asset is calculated based on recent transactions for similar instruments.

3.2.2 Assets at amortized cost.

In accordance with IFRS 9 the Company classifies and values financial assets at amortized cost when the following conditions are met:

- The asset falls within a business model whose goal is to keep the asset and collect the associated contractual cash flows.

- The contractual terms of the financial asset give rise to cash flows on specific dates, which are exclusively receipts of capital plus interest on the balance of the outstanding capital.

Amortized cost is the acquisition cost of a financial asset less incremental costs, being the portion systematically recognized in net income on the difference between the initial amount and the repayment value at maturity.

The amortized cost for financial assets also includes any corrections to its value for impairment losses.

The portion systematically recognized in net income on financial instruments is calculated using the effective interest rate method. The effective interest method values a financial instrument as the sum of its estimated cash flows for all concepts throughout its remaining life.

3.2.3 Investments in equity instruments

Investments in equity instruments are those where the shareholding is less than 20% (without significant influence), and are valued at fair value with changes taken to other comprehensive income. Dividends are recognized in net income.

3.2.4 Property, plant and equipment

Fixed assets are valued at acquisition cost, which includes the additional costs required to bring the asset into use, less accumulated depreciation and any impairment losses. Impairment losses, if any, will be recorded as an expenditure in the net income statement. Depreciation is recorded in the net income for the period using the straight-line method based on the estimated useful lives of assets after having deducted their respective residual value.

3.2.5 Asset impairment

On each financial closing date assets are evaluated for evidence of impairment. Should there be any such indication, the recoverable amount of the asset is estimated in order to determine the amount of impairment.

3.2.6 Liabilities at fair value

These are liabilities at fair value, financial derivatives contracts and financing obligations. Each of the financial derivative instruments is reported as an asset when its fair value is positive, and as a liability when it is negative, the details of these instruments are presented in Note 21.

3.2.7 Liabilities at amortized cost.

These are financial liabilities with fixed payments valued at amortized cost. The details of these instruments are presented in Note 21.

3.2.8 Provisions

Provisions are recorded when:

- The Company has a legal or implied current obligation as a result of past events;

- It is likely that a disbursement will be necessary to settle the obligation;

- The amount has been estimated reliably.

When there are a number of similar obligations, the likelihood that a disbursement will be necessary will be assessed taking these types of obligations as a whole. A provision is recognized even if the probability of a disbursement on an item included in the same class of obligations is small. Provisions are valued at the current value of the disbursements that are expected to be required to settle the obligation using an interest rate that reflects the current market value of money over time and the specific risks of the obligation. The increase in the provision due to the passage of time is recognized as a financial expense.

3.2.9 Revenue Recognition

Revenue is recognized in the statement of net income when it is probable that economic rewards will be received and can be reliably measured.

Service revenue is also recognized considering the stage of completion of the services provided as of the reporting date, provided that the outcome of the transaction can be reliably estimated. In other words, the amount of the revenue can be reliably measured, it is probable that the economic benefits associated with the transaction will flow to the Company, the stage of completion of the transaction at the end of the reporting period can be measured reliably and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

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3.3. INSURANCE COMPANIES

3.3.1 Financial investments

3.3.1.1 Financial assets at fair valueThe Chilean Securities and Insurance Supervisor requires the application of IFRS 9 for the classification and measurement of financial instruments in accordance with General Regulation (NCG) 311 and its amendments.

Financial assets that do not qualify for the category of amortized cost are measured at fair value with changes taken to net income, in accordance with the General Regulation (NCG) 311 and its amendments issued by the Chilean Securities and Insurance Supervisor.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction (IFRS 1).

a) National variable incomea.1) Registered shares with an adjusted presenceThe shares registered in the Share Register and listed on a country’s stock exchange shall be valued at the market value with changes taken to net income, when the adjusted proportion of those shares traded on that exchange is equal to or greater than 25% at the close of the financial statements, in accordance with the provisions of Title II of General Regulation 327 dated January 17, 2012.

In accordance with General Regulation (NCG) 311 and its amendments, the market value means the weighted average price for the number of shares traded on the last day of stock trading prior to the close of the financial statements. The transactions considered in this calculation will be those that total an amount equal to or greater than 150 UF.

a.2) Other sharesShares that do not comply with the conditions established in the previous paragraph are valued according to the general criteria established in the IFRS, being IFRS models of fair value.

a.3) Investments in mutual fundsInvestments in mutual funds are valued at the selling price of the mutual fund at the closing date of the financial statements. The difference between this value and the book value is taken to net income in the financial statements, regardless of whether it is a debit or a credit.

a.4) Investments in investment fundsIn accordance with NCG 311 and its amendment dated June 28, 2011, investments in investment funds that have an adjusted proportion of those funds equal to or greater than 20% calculated in the same manner as for national shares shall be valued at the weighted average price for the number of funds traded, as informed by the Santiago Stock Exchange. Investments in investment funds that do not comply with presence requirements shall be valued at their Economic Value. If the Economic Value of these funds is not reported, these shall be valued at their Book Value.

b) Foreign variable incomeb.1) Shares traded on a stock exchangeThe shares of foreign companies traded on a foreign stock exchange are valued at market value with changes taken to net income.

Market value is understood as the closing price observed on the last day of stock trading prior to the close of the financial statements in the stock exchange where it was purchased.

b.2) Shares not traded on a stock exchangeShares that are not traded on a stock exchange are valued according to the general criteria established by the IFRS, being their own models of fair value mentioned above in the paragraph referring to other shares.

b.3) Investments in fundsInvestments in mutual funds and investment funds constituted in the country, whose assets are invested in foreign securities referred to paragraph 3 (e) of Article 21 of D. F. L. 251 dated 1931 are valued at the closing price of the fund on the last trading day of the corresponding month at the close of the financial statements. Investments in funds that are not traded are valued according to IFRS models of fair value with changes taken to net income.

3.3.I.2 Financial assets at amortized cost.A financial asset is classified and valued at amortized cost when the following conditions are met:

- The contractual terms of the financial asset give rise to cash flows on specific dates, which are exclusively payments of capital plus interest on the balance of the outstanding capital.

The business model of the Company is to hold the asset for the purpose of collecting the contractual cash flows.

According to the General Regulation 311 and its amendments issued by the Chilean Securities and Insurance Supervisor, companies value their fixed income investments at amortized cost.

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3.3.1.3 Hedging transactionsHedging derivatives are used to protect different asset classes, in different currencies, as necessary.

The derivatives to hedge shares and investment funds of currency forwards US dollar-Chilean peso and US dollar-UF are recorded at fair market value.

According to the instructions of the Chilean Securities and Insurance Supervisor, derivatives to cover fixed income and cross currency swaps are accounted for at amortized cost, minus the assets and liabilities according to the contractual rates, the value of the derivative being the difference between the two flows.

3.3.1.4 Investment derivativesInvestment derivatives are all those that do not meet the conditions of hedging derivatives as indicated by the current legislation and are valued at fair value with changes taken to net income, in accordance with IFRS models.

3.3.1.5 Insurance investments - single investment account (CUI)Fixed Income Investments whose assets support fund value reserves in CUI insurance will be valued at Amortized Cost, and Variable Income Investments at Fair Value.

3.3.2 Asset impairment

Assets are evaluated for evidence of impairment on the financial closing date. Should there be any such indication, the recoverable amount of the asset is estimated in order to determine the impairment amount.

Investments in fixed income instruments such as endorsable mutual mortgages, leases, rentals, promises, options and real estate accounts are made on the basis of group analysis. Group evaluation will be applied to groups of loans with homogeneous characteristics in terms of type of debtors and agreement conditions, in order to establish necessary provisions to cover the portfolio risk. This evaluation will use technically based estimates and will follow prudential criteria, both with regard to the payment behavior of the group in question as to the recovery of their delinquent loans.

a) Endorsable mutual mortgagesThe company calculates legal impairment for mutual mortgages in accordance with General Regulation 371 dated December 9, 2014. The impairment due to mortgage repayment is calculated in accordance with Circular 1806 dated June 28, 2006.

b) Receivables from policyholdersThe provision or impairment on premiums receivable from policyholders is calculated in accordance with Circular 1499 dated September 2000 and its subsequent amendments issued by the Chilean Securities and Insurance Supervisor. Assets are evaluated for evidence of impairment on the financial closing date. Should there be any such indication, the recoverable amount of the asset is estimated in order to determine the impairment amount.

c) Claims receivable from reinsurersThe provision or impairment in claims receivable from reinsurers is calculated in accordance with the provisions of Circular 848 dated January 1989 and its subsequent amendments issued by the Chilean Securities and Insurance Supervisor. Assets are evaluated for evidence of impairment on the financial closing date. Should there be any such indication, the recoverable amount of the asset is estimated in order to determine the impairment amount.

d) Financial assets at amortized cost.The impairment of investments in bonds issued by foreign or domestic companies or financial institutions and syndicated loans is calculated on the basis of an individual analysis of the issuer or counterpart. The financial situation of investments in a company’s portfolio will be analyzed regularly to assess whether to apply impairment if this appears to be permanent.

e) RentalsProvisions on rental income receivable are created when it is more than 60 days overdue. Provisions on property taxes due under a rental contract are created when they are more than 60 days overdue. Where overdue amounts due have been renegotiated, the provision will be maintained in its entirety and only reversed against receipt of funds.

f) LeasingProvisions on overdue lease installments are created in the same month the installment fell due. The provision will include interest, capital and value added tax (according to the legal regulations). Provisions on property taxes under a leasing contract are created when they are more than 60 days overdue. Where overdue amounts due have been renegotiated by the same company (excluding debt novations), the provision will be maintained in its entirety and only reversed against receipt of funds.

3.3.3 Investment and own use property

Investment properties are land and buildings held by Companies to obtain economic rewards by renting them, from their capital appreciation, and for their own use. In accordance with the provisions of General Regulation (NCG) 316, real estate investments are valued as follows:

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a) National real estateNational real estate is valued at the lower of:

- The inflation corrected cost, less accumulated depreciation, calculated according to the regulations of the Institute of Chilean Accountants A.G. and

- the commercial value, which is the lesser of two professional appraisals.

b) Investments in real estate subsequently leasedLease contracts that transfer substantially all the risks and rewards inherent in the ownership of those leased assets are classified and valued as finance leases; otherwise they are classified as operating leases.

Real estate investments subsequently leased are valued at the lesser of:

- The residual value of the particular contract calculated in accordance with the regulations issued by the Institute of Chilean Accountants A.G.

- The inflation corrected cost, less accumulated depreciation, and

- The commercial value, which is the lesser of two professional appraisals.

c) Investments in real estate abroadInvestments in real estate abroad are valued at the lesser of:

- The inflation corrected historic cost for that country less accumulated depreciation, calculated on the basis of generally accepted accounting principles established by the Institute of Chilean Accountants A.G., and

- The professionally appraised value.

d) Real estate in constructionReal estate in construction is recorded at book value corrected for inflation that reflects the corresponding construction stage, calculated according to the regulations of the Institute of Chilean Accountants A.G., until it is completed and can be commercially appraised in which case it will be valued accordingly.

e) Furnishings and equipment for own useFixed assets are valued at acquisition cost, which includes the additional costs required to bring the asset into use, less accumulated depreciation and any impairment losses.

Impairment losses, if any, will be recorded as an expenditure in the statement of net income.

Depreciation is recorded in the net income for the period using the straight-line method based on the estimated useful lives of assets after having deducted their respective residual value.

3.3.4 Intangible assets - goodwill

Goodwill is the excess cost of an investment in a subsidiary or an associate over the Company’s participation in the fair value of its net identifiable assets at the acquisition date. Subsequent to initial recognition, goodwill is measured at cost less any accumulated impairment loss.

3.3.5 Intangible assets other than goodwill

Intangible assets acquired separately are measured at acquisition cost. Intangible assets are recorded at cost less accumulated amortization and accumulated impairment loss, if any.

The useful lives of intangible assets are evaluated as either finite or indefinite. Intangible assets with finite lives are amortized linearly during their estimated useful economic lives, and their deterioration is evaluated each time there is an indication of impairment. The amortization period and method for intangible assets with finite lives are reviewed at each reporting date. Changes as a result of these reviews are treated as changes in accounting estimates.

Intangible Assets with indefinite useful lives are not amortized and any potential deterioration is evaluated annually. The useful life of an intangible asset with an indefinite life is reviewed annually.

3.3.6 Insurance transactions

Revenue is recognized in the statement of net income when it is probable that economic rewards are received and can be reliably measured..

I. Direct premiumsThese are the premiums on company insurance sales, net of cancellations, between January 1 and the financial closing date. Returns of premiums are only deducted for those technical concepts related to favorable experiences.

II. Accepted premiumsThese are premiums that companies accept from other insurers or from reinsurers as reinsurers, net of cancellations and contractual returns.

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III. Ceded premiumsThese are the direct premium or accepted premium portions that companies transfer to reinsurers through proportional reinsurance contracts..

IV. Other assets and liabilities arising from insurance and reinsurance contracts..a) Embedded derivatives in insurance contractsCompanies perform an analysis of their marketed insurance products to identify any embedded derivatives and how they should be valued. Consequently, there are embedded derivatives in “Vida Activa” and “APV Seguro”, as they offer interest rates indexed to a financial index, but with a guaranteed floor. However, it is not necessary to separate this component or value it, as it is closely associated with the product in each case.

b) Acquisition costsCosts that are directly associated with the sale of insurance are acquisition costs. Acquisition costs include brokerage commissions and those direct costs associated with the sale of insurance which would not have been incurred had insurance contracts not been issued (direct and fully variable costs), such as inspection costs for the insured item. Acquisition costs are recognized immediately in net income.

c) Technical reservesc.1) Current Risk ReserveCurrent risk reserves are calculated on insurance coverage valid up to 4 years, in accordance with General Regulation 306 and its subsequent amendments issued by the Chilean Securities and Insurance Supervisor. This includes all direct premiums. The reserve calculated as the proportion of unearned premiums, based on the proportion of future coverage to be provided calculated according to the method of daily numerals. The reserves are calculated at gross value without offsetting the effect of any assigned reinsurance. Although the Company always keeps a current risk reserve equivalent to at least one month’s premium, or the premium equivalent to the policy grace period, if greater.

Notwithstanding the foregoing, General Regulation 306 establishes that these changes apply to new risks. If a policy was issued or last renewed prior to January 1, 2012 the reserve is calculated using the criteria and principles of Circular 33 issued by the Chilean Securities and Insurance Supervisor.

Likewise, the Company does not perform the standard calculation on credit insurance whose validity is longer than a year, or where it is paid in a single premium. In these circumstances the reserves are calculated in accordance with General Regulation 306 and the amendments in General Regulation 320 and in General Regulation 359 issued by the Chilean Securities and Insurance Supervisor.

The Company is authorized to calculate a mathematical reserve for credit insurance with a validity longer than a year or paid with a single premium.

c.2) Mathematical ReserveMathematical reserves are calculated in accordance with General Regulation 306 and its subsequent amendments issued by the Chilean Securities and Insurance Supervisor. This is the present value of future payments on claims on policies valid for longer than four years, less the present value of future premiums. The current value of both components is calculated on the basis of the tables of mortality and morbidity as defined by the Supervisor using a maximum real interest rate of 3% per annum. Estimated flows are gross of reinsurance, so they do not include any assigned reinsurance which is recognized as an asset.

Exceptionally, and with prior authorization from the Chilean Securities and Insurance Supervisor, the mathematical reserve is calculated using the standard methodology for credit insurance with a validity longer than a year or paid with a single premium.

c.3) Disability and Survival Insurance Reserve (SIS)The reserve is calculated according to the instructions in General Regulation 318 dated 2011, the amendments in General Regulation 374, and in General Regulation 243 dated 2009. Any reinsurance that exists is not included in the calculation of technical reserves. The technical reserve is calculated in gross terms without deduction for reinsurance. The participation of reinsurance in the claims reserve or the premium reserve is recognized as a reinsurance asset, which is subject to an evaluation of impairment, in accordance with the general rules of IFRS. The foregoing is notwithstanding the deduction of assigned reinsurance from technical reserves, carried out for purposes of compliance with the requirements of risk equity and borrowing limits established in the Decree Law 251, which is subject to the provisions of Article 20 of this law and to the specific regulations issued by the Chilean Securities and Insurance Supervisor.

c.4) Annuities and Private Income ReserveThis reserve is calculated in accordance with General Regulation 318 dated September 2011 and its subsequent amendments, which considers a different treatment for new policies compared to valid policies on the date this standard took effect, and the amendments in General Regulation 374 applicable to new policies from March 2015. Therefore, the technical reserves on pension income insurance or private income insurance is calculated according to the regulations contained in Circular 1512 dated 2001, and other instructions applicable on the date the standard referred to above took effect, and subject to the following:

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Policies that came into effect after July 1, 2016For policies that came into effect after July 1, 2016 the technical reserve is calculated in accordance with current regulations, with the following adjustments:

a) The technical reserve discount interest rate does not take account of the Company’s matching measurement. Furthermore, as established by General Regulation 374, the discount rate is the lower of the Equivalent Cost Rate and the Sales Rate at the date the policy took effect, as defined in Section III of Circular 1512. The equivalent cost rate is calculated using the original policy flows and the rate vector published by the Securities and Insurance Supervisor.

b) The reserve matching adjustment described in Section IV of Circular 1512 is not included, and therefore the Company only creates base technical reserves, using the interest rate on the date the policy took effect, as mentioned in (a) above.

c) The flow of obligations on income assigned to reinsurance is not discounted in the calculation of technical reserves on related policies, so 100% of cashflow with policyholders is always included. Assigned cash flow is recognized as a reinsurance asset, calculated in accordance with the methodology defined in Circular No. 1512. The reinsurance asset is subject to an evaluation of impairment, in accordance with the general rules of IFRS. At the time the reinsurance contract is agreed, any difference between the reinsurance premium and the asset created according to the foregoing is immediately taken to net income. The foregoing is notwithstanding the deduction of assigned reinsurance from technical reserves, carried out for purposes of compliance with the requirements of risk equity and borrowing limits established in the DFL N° 251 dated 1931, which is subject to the provisions of Article 20 of this law and to the specific regulations issued by the Chilean Securities and Insurance Supervisor.

d) The technical reserves on reinsurance acceptances or portfolio transfers contracted after January 1, 2012 and regardless of the date the underlying policy took effect, are calculated without including matching adjustment, discounting the accepted flows at the lower interest rate between the TM on the date the reinsurance contract took effect and the interest rate implicit in the acceptance of the cashflows (rate calculated on the basis of the reinsurance premium).

e) The Company calculates the direct and accepted payment flows fully using the mortality tables issued by the Chilean Securities and Insurance Supervisor with the corresponding improvement factors at the calculation date.

f) The policies and any acceptances identified under this number are not included in the matching measurement or for calculating the reserve matching adjustment where those policies came into effect before January 1, 2012.

Policies that came into effect from March 1, 2015 to June 30, 2016The technical reserve on policies that came into effect from March 1, 2015 to June 30, 2016 is calculated in accordance with current regulations, with the following adjustments:

a) The technical reserve discount interest rate does not take account of the Company’s matching measurement. Furthermore, as established by General Regulation 374, the discount rate is the lower of the Equivalent Cost Rate and the Sales Rate at the date the policy took effect, as defined in Section III of Circular 1512. The equivalent cost rate is calculated using the original policy flows and the rate vector published by the Securities and Insurance Supervisor.


c) The flow of obligations on income assigned to reinsurance is not discounted in the calculation of technical reserves on related policies, so all policyholder cashflow is included. Assigned cash flow is recognized as a reinsurance asset, calculated in accordance with the methodology defined in Circular 1512. The reinsurance asset is subject to an evaluation of impairment, in accordance with the general rules of IFRS. At the time the reinsurance contract is agreed, any difference between the reinsurance premium and the asset created according to the foregoing is immediately taken to net income. The foregoing is notwithstanding the deduction of assigned reinsurance from technical reserves, carried out for purposes of compliance with the requirements of risk equity and borrowing limits established in the DFL 251 dated 1931, which is subject to the provisions of Article 20 of this law and to the specific regulations issued by the Chilean Securities and Insurance Supervisor.

d) The technical reserves on reinsurance acceptances or portfolio transfers contracted after January 1, 2012 and regardless of the date the underlying policy took effect, are calculated without including matching adjustment, discounting the accepted flows at the lower interest rate between the TM on the date the reinsurance contract took effect and the interest rate implicit in the acceptance of the cashflows (rate calculated on the basis of the reinsurance premium).



Policies that came into effect from January 1, 2012 to February 28, 2015The technical reserve on policies that came into effect from January 1, 2012 to February 28, 2015 is calculated in accordance with current regulations, with the following adjustments:

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a) The technical reserve discount interest rate does not take account of the Company’s matching measurement. Therefore, the discount rate is the lower of the TM and the Sales Rate at the date the policy took effect, as defined in Section III of Circular 1512.


c) The flow of obligations on income assigned to reinsurance is not discounted in the calculation of technical reserves on related policies, so all policyholder cash flow is included. Assigned cash flow is recognized as a reinsurance asset, calculated in accordance with the methodology defined in Circular 1512. The reinsurance asset is subject to an evaluation of impairment, in accordance with the general rules of IFRS. At the time the reinsurance contract is agreed, any difference between the reinsurance premium and the asset created according to the foregoing is immediately taken to net income. The foregoing is notwithstanding the deduction of assigned reinsurance from technical reserves, carried out for purposes of compliance with the requirements of risk equity and borrowing limits established in the DFL 251 dated 1931, which is subject to the provisions of Article 20 of this law and to the specific regulations issued by the Chilean Securities and Insurance Supervisor.

d) The technical reserves on reinsurance acceptances or portfolio transfers contracted after January 1, 2012 and regardless of the date the underlying policy took effect, are calculated without including matching adjustment, discounting the accepted flows at the lower interest rate between the TM on the date the reinsurance contract took effect and the interest rate implicit in the acceptance of the cash flows (rate calculated on the basis of the reinsurance premium).



g) The liability cashflows are calculated according to current standards and where appropriate the mortality tables RV-2014, B-2014 and MI-2014 will be gradually applied, in accordance with the gradual recognition mechanism implemented by the Company as defined in Circular 2197.

Policies that came into effect before January 1, 2012.The technical reserve on life annuity policies with validity prior to January 1, 2012 is calculated according to the instructions in Circular 1512 and other instructions issued by the Chilean Securities and Insurance Supervisor applicable on the date the standard referred to above took effect.

However, the following has been taken into consideration:

a) The retained and assigned technical reserves on cashflows from obligations on annuities assigned in reinsurance are calculated in accordance with the provisions of Section V, paragraph 2.2 of Circular 1512. However, the technical reserves in the financial statements, both as basic technical reserves and as financial reserves, are reported in gross terms aggregating these two concepts. The assigned reserve is reported as an assigned reinsurance asset which is subject to an evaluation of impairment, in accordance with the general rules of IFRS. The foregoing is notwithstanding the deduction of assigned reinsurance from technical reserves, carried out for purposes of compliance with the requirements of risk equity and borrowing limits established in the DFL 251 dated 1931, which is subject to the provisions of Article 20 of this law and to the specific regulations issued by the Chilean Securities and Insurance Supervisor.

b) The liability cashflows are calculated according to current standards and where appropriate the mortality tables RV-2009, B-2006 and MI-2006 will be gradually applied, in accordance with the gradual recognition mechanism implemented by the Company.

c.5) Claims ReserveClaims reserves are calculated in accordance with General Regulation 306 and subsequent amendments issued by the Chilean Securities and Insurance Supervisor. Claims are recorded without discounting any applicable reinsurance. The reinsurer’s obligation is accounted for as a Company asset, which is subject to an evaluation of impairment, in accordance with the general rules of IFRS and the specific regulations of the Chilean Securities and Insurance Supervisor.

Claims reserves take into account reported claims, and claims that have occurred but not yet been reported (IBNR).

- The reported claims reserve is calculated using the best estimate of claim costs and includes all claims settled but not paid, claims settled but disputed by the policyholder, and claims following the settlement process.

- The reserves on claims that have occurred but not yet been reported is calculated using the standard method, being the development

method of claims incurred, also called “the claims triangle method”.

c.6) Premium Deficiency ReservePremium deficiency reserves are calculated in accordance with General Regulation 306 and its subsequent amendments issued by the Chilean Securities and Insurance Supervisor.

In order to evaluate whether the assumptions made when an insurance policy is written are maintained over the time horizon of the policy and, therefore, to measure whether the unearned premium reserve is sufficient and in line with the current estimate of risk and related expenses, a

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premium sufficiency test (PST) must be conducted regularly to evaluate these concepts.

This test is based on the “Combined Ratio” that relates technical disbursements to the premiums received in relation to them, using historical information contained in the financial statements relating to a certain number of periods. The analysis of sufficiency is a concept net of reinsurance, so risk transferred to the reinsurer is recognized for purposes of this calculation.

Therefore, when verified disbursements exceed income, a premium deficiency reserve is created in addition to the current risk reserve, which will be recognized as a loss in the period in which it was detected. This reserve must be recognized gross within liabilities, and the participation of the reinsurer recognized as an asset.

The Company performs the calculation of premium deficiency three months after reporting its financial statements, in accordance with the provisions contained in Ordinary Bulletin 1937 issued by the Chilean Securities and Insurance Supervisor.

c.7) Adequate Liabilities ReserveThe adequate liabilities reserves are calculated in accordance with General Regulation 318 and its subsequent amendments issued by the Chilean Securities and Insurance Supervisor. The Company evaluates the adequacy of these reserves at each financial quarter end by performing the “Liability Adequacy Test” (LAT). This test uses international criteria in common use and the concepts of IFRS 4 associated with the test. The assumptions used by the Company used are reviewed at the close of every year, in order to evaluate any change in the value of the assumed obligations. When this test detects a shortfall in the technical reserves, the Company creates the corresponding additional technical reserve. Otherwise, no adjustment is made to the technical reserves.

This test is performed considering the insured’s options or benefits and the guarantees agreed by the Company, which are recognized net in liabilities. This test is performed according to the technical and actuarial criteria agreed by the Company. Notwithstanding the foregoing, and according to a regular evaluation of the concepts analyzed within this test, additional reserves previously created can be reversed, with any changes taken to the Company’s net income.

When the Company tests the sufficiency of premiums, even if that test does not result in the creation of a premium deficiency reserve, the Company should evaluate whether that test complies with the requirements to replace the liability adequacy test. if so, the liability adequacy test is not necessary. The Company has evaluated and confirmed that this test complied with the requirements to replace the liability adequacy test, so it has been omitted for policies with a Current risk reserve.

c.8) Other Technical Reserves These reserves cover debts due from policyholders, in accordance with the provisions of Circular 2022, and other reserves created by the Company in accordance with current regulations.

This heading includes the reserves generated as a result of the liability adequacy test, which are recorded net of reinsurance.

c.9) Reinsurer’s Share of Technical ReservesThis reserve is calculated on gross direct premiums without discounting reinsurance, in accordance with General Regulation No. 306 and its subsequent amendments. When risk is transferred to a reinsurer, an asset is recognized for this assignment, whose calculation and recognition is consistent with that applied to the RRC. This asset is subject to an evaluation of impairment, in accordance with the general rules of IFRS. While the corresponding premium is not transferred to the reinsurer, the corresponding liability is calculated (“Amounts owed to reinsurers”), although this is not a technical reserve. In any case, the reinsurance asset may not exceed the premium ceded to the reinsurer.

c.10) Matching ReserveThe Company matching reserve is calculated in accordance with the provisions of Circular 1,512 and the modifications in General Regulation 318 issued by the Chilean Securities and Insurance Supervisor.

The matching reserve adjustment is the difference between the base technical reserve and the technical financial reserve and is only applicable to policies that took effect prior to January 1, 2012.

3.3.7 Investments in associates

Associates are entities over which the Company has significant influence, although without control, which is generally the case when the Company has between 20% and 50% of the voting rights, as stated in IAS 28 “Investments in Associates”. Investments in associates are accounted for under the equity method and are initially recognized at cost. Investments in associates are presented in the statement of financial position along with the goodwill identified in the acquisition, net of any accumulated impairment loss.

Under the equity method, the investment in associates is recognized in the statement of financial situation at its cost, plus the Company’s share in the increase or decrease of the associate’s equity. The statement of net income reflects the Company’s share in the net income of the associate. When a change has been recognized directly in the equity of the associate, companies recognize their share in this change in their own equity and this is presented in the statement of changes in equity. Profits and losses resulting from transactions between companies and the associate are eliminated when measuring the investment in the associate.

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3.3.8 Financial liabilities

This heading includes financial liabilities valued at fair value with changes taken to net income or valued at amortized cost, debts with financial institutions, obligations generated by covenants and any other financial liability.

3.3.9 Provisions

Provisions are recorded when:

- The Company has a present legal or implied obligation as a result of past events.

- It is likely that a disbursement will be necessary to settle the obligation.

- The amount has been estimated reliably.

When there are a number of similar obligations, the likelihood that a disbursement will be necessary will be assessed taking these obligations as a whole. A provision is recognized even if the probability of a disbursement on an item included in the same class of obligations is small.

Provisions are valued at the current value of the disbursements that are expected to settle the obligation using a before-tax interest rate that reflects the current market value of money over time and the specific risks of the obligation.

3.3.10 Investment income and expenses

a) Financial assets at fair valueChanges in the market value of financial instruments that the company has classified as valued at fair value are recognized in net income.

Net income from the sale of financial instruments valued at fair value is the difference between the sale value and the book value.

Dividend income from shares is recognized in net income when it is declared.

b) Financial assets at amortized cost.Accrued interest on the portfolio of investments that companies have classified as valued at amortized cost is recognized in net income in the financial statements for the corresponding period.

Net income from the sale of financial instruments valued at amortized cost is the difference between the sale value and the book value.

3.3.11 Claims costs

Claims costs are the total number of claims accrued during the year from direct coverage provided by companies, less the participation of reinsurers in accordance with valid contracts.

3.3.12 Brokerage income

Brokerage income arises from commission on insurance selling activities, and reinsurance trading.

3.4. BANK AND SUBSIDIARIES

3.4.1 Asset and liability valuation criteria

The criteria for measuring assets and liabilities in the statement of financial position are the following:

3.4.1.1 Financial assets and liabilities measured at amortized cost: Amortized cost is the acquisition cost of a financial asset less incremental costs, being the portion systematically recognized in net income on the difference between the initial amount and the repayment value at maturity.

Amortized cost for financial assets also includes corrections for any impairment that may have occurred.

The portion systematically recognized in net income on financial instruments is calculated using the effective interest rate method. The effective interest method values a financial instrument as the sum of its estimated cash flows for all concepts throughout its remaining life.

3.4.1.2 Assets measured at fair value:The fair value of an asset or a liability on a given date is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction (IFRS 1). The most common and objective reference to the fair value of an asset or liability is the price paid in an organized and transparent market (“quoted price” or “market price”).

When there is no market price to determine the fair value amount for a particular asset or liability, the fair value is estimated using recent transactions of similar instruments.

Where it is not possible to determine the fair value of a financial asset or liability, it is valued at amortized cost.

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3.4.1.3 Assets valued at acquisition cost:Corrected acquisition cost is the acquisition cost of an asset less any impairment losses.

The financial statements of the Bank and its consolidated subsidiaries have been prepared on the basis of acquisition cost with the exception of:

- Derivative financial instruments that have been measured at their fair value.

- Investment instruments available for sale, which are measured at fair value.

3.4.1.4 Brokerage receivablesThese amounts are receivable as a result of purchasing financial instruments traded on the stock exchange on behalf of customers. They are accounted for when billed and remain until paid. Commissions and exchange rights receivable from customers and counterpart brokers are also included. In addition, accounts receivable on installment transactions from repurchase agreements on behalf of the customer are included under this heading.

3.4.2 Investment instruments held to maturity and available for sale

Investments classified as held to maturity include only those instruments which the bank has the ability and intention to hold until maturity. All other investment instruments are classified as available for sale.

Investment instruments are initially recognized at cost. Instruments available for sale are then valued at their fair value using market prices or valuations obtained from using models. Profits or losses arising on changes in fair value are recognized directly in equity. When these investments are sold or deteriorate, the accumulated fair value adjustments in equity are transferred to net income under “Profits on price differences” or “Losses on price differences”, as appropriate.

Investments held to maturity are recorded at amortized cost plus interest and accrued adjustments, less provisions for impairment when the amount so recorded is greater than the estimated recovery amount.

The interest and indexation on investments held to maturity and instruments available for sale are included under the heading “Income from interest and indexation”.

Purchases and sales of investment instruments that must be delivered within time limits defined by the regulations or conventions of that market are recognized on the date the deal is struck, being the date on which the purchase or sale of that asset becomes a commitment.

3.4.2.1 Traded securitiesTraded securities are those securities acquired with the intention of generating a profit from fluctuations in short-term prices, or through brokerage margins, or where they are included in a portfolio that contains a pattern of taking profits in the short-term.

Traded securities are recorded at fair value based on market prices as of each reporting date. Profits or losses on changes to a fair value appraisal, as well as the results of trading activities, are included in the statement of net income.

Accrued interest and indexation are presented in the statement of net income.

All purchases and sales of traded securities that must be delivered within time limits defined by the regulations or conventions of that market are recognized on the date the deal is struck, being the date on which the purchase or sale of that asset becomes a commitment. Any other purchase or sale is treated as a derivative (forward) until they are liquidated.

3.4.2.2 Derivative financial instrumentsFinancial derivatives contracts which include foreign currency and UF forwards, interest rate futures, currency and interest rate swaps, currency and interest rate options and other derivative financial instruments are initially recognized in the balance sheet at cost (including transaction costs) and later valued at fair value. Fair value is obtained from market prices, discounted cash-flow models and option value models, as appropriate. Derivatives contracts are reported as an asset when its fair value is positive, and as a liability when this is negative, under the heading “Financial derivatives contracts”.

Certain derivatives embedded in other financial instruments are treated as separate derivatives, when their risk and features are not closely related to the main contract and they are not recorded at fair value with unrealized profits and losses taken to net income.

At the time a derivative contract is agreed it should be defined by the Bank as a traded derivative instrument or a hedge accounting derivative instrument.

Changes in the fair value of derivatives contracts held for trading are included under the heading “Net income on financial operations” in the statement of net income.

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As of December 31, 2016 and 2015, the bank and its subsidiaries held financial derivative instruments for hedging purposes of ThCh$ 15,219,000 and ThCh$ 39,898,000 respectively.

As of December 31, 2016 and 2015, the bank held traded financial derivative instruments of ThCh$ 1,016,796,000 and ThCh$ 1,071,334,000 respectively.

3.4.3 Loans and receivables from customers

Loans are non-derivative financial assets with fixed or defined repayments that are not quoted in an active market and that the Bank has no intention to sell immediately or in the short term, so are presented at amortized cost using the effective interest rate method.

As of December 31, 2016 and 2015, Banco Consorcio and its subsidiaries did not have direct transaction costs that impacted the effective rate.

Loans and receivables from customers are shown net of credit risk provisions and are presented in Trade and other receivables, see note 10.

3.4.4 Factoring transactions

Factoring transactions are valued at the amounts disbursed by the bank in exchange for invoices or other trade instruments that represent loans, and delivered to the bank by the assignor.

The difference between the amounts disbursed and the nominal value of the loans is taken to net income. In those cases where instruments are assigned without the assignor’s responsibility, the bank bears the insolvency risk of the party obliged to pay.

Factoring transactions are presented as part of loans, and disclosed in note 10.

3.4.5 Recovery of loans and receivables from customers

The recoveries of previously provided loans and receivables from customers are recorded directly in net income and presented as a reduction in credit risk provisions.

3.4.6 Interest and indexation income and expenditure

Interest and indexation income and expense are recognized and accounted over the period they are earned at the effective rate.

However, interest and indexation on overdue loans and those that are not yet overdue but with a high risk of irrecoverability are not accrued, in accordance with the policy of prudence. They are accounted for when they are received.

3.4.7 Commission income and expenditure

Commission income and expenditure are recognized in the statement of comprehensive income under different policies depending on their nature. The most significant are:

- Those that arise from a single event, on the date that event occurred.

- Those that arise on transactions or services that occur over a period of time, during the life of such transactions or services.

- Those linked to financial assets or liabilities, on the date they are collected.

When acting as financial broker, gross cash-flows are received on behalf of the main service provider. These cash-flows do not result in an increase in equity, and are therefore not considered revenue. However, commission on these transactions is considered as revenue.

3.4.8 Impairment

3.4.8.1 Financial assetsA financial asset is evaluated at each reporting date to determine if there is objective evidence of events that might cause a negative effect on the future value of the asset.

Impairment losses on financial assets valued at amortized cost are calculated as the difference between the book value of the asset and the present value of estimated future cash flows discounted at the effective interest rate.

Impairment losses on financial assets available for sale are calculated by reference to their fair value.

Individually significant financial assets are examined individually to determine their impairment. The remaining financial assets are evaluated collectively in groups that share similar credit risk characteristics.

All impairment losses are taken to net income and any accumulated loss on a financial asset available for sale previously recognized in equity is transferred to the statement of comprehensive income.

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The reversal of an impairment loss occurs only if this can be objectively linked to an event that occurred after the loss was recognized. Any reversals on financial assets recorded at amortized cost or available for sale that are securities for sale, are recognized in the statement of comprehensive income. In the case of financial assets that are variable income securities, any reversal is recognized directly in equity.

As of December 31, 2016 and 2015, the bank and its subsidiaries had no indication of impairment of their financial assets available for sale.

3.4.8.2 Non-financial assetsThe book values of the bank`s non-financial assets excluding deferred tax are reviewed at each financial close to check for indications of impairment. If such evidence is detected, then the recoverable amount of the asset is estimated.

3.4.9 Investments in companies

Investments in companies are those where the bank does not have a significant influence. They are recorded at the acquisition value.

3.4.10 Intangible assets

Intangible assets held by the bank are recorded at cost, less accumulated amortization, in accordance with their remaining useful life.

Subsequent disbursements are capitalized when they increase the future economic rewards captured by the corresponding specific asset. All other disbursements, including goodwill and internally generated trademarks, are recognized in the income statement when they occur.

3.4.11 Property, plant and equipment

Items in fixed assets are measured at cost less accumulated depreciation and impairment losses. Cost includes expenses attributed directly to the acquisition of the asset.

When part of a fixed asset item has a different useful life, they are recorded as separate items (major components under the fixed assets heading).

Depreciation is recognized in the statement of net income based on the straight-line depreciation method on the useful lives of each part of a fixed asset item.

Depreciation methods, useful lives and residual values are reviewed at each financial close.

3.4.12 Credit risk provisions

The necessary provisions to cover the risk of loan losses including contingent loans are calculated and recorded every month, in accordance with the policies and procedures defined by the Bank and approved by its Board.

There are two methods for calculating provisions at the Bank:

A. Models based on an analysis of individual debtorsThe analysis of individual debtors is used for the entire business banking loan portfolio, where business banking includes all commercial loans under the following categories:

- Factoring receivables

- Commercial loans

- Guarantees.

- Lines of credit

- Interbank loans

- Leasing receivables

B. Models based on group assessmentThe analysis of grouped debtors is used for the entire loan portfolio of Personal Banking, where Personal Banking includes all consumer loans, including renegotiated loans, and housing loans. Housing loans include general purpose mutual endorsable mortgages. This analysis also includes purchased mortgage loans.

Model 1: Individual provisionsIn accordance with the provisions of Chapter B1 of the SBIF Accounting Standards, the Commercial or Business banking portfolio is divided into 3 portfolios:

- Normal Portfolio: This portfolio includes those customers whose payment capability enables them to fulfill their obligations and commitments, and an evaluation of their financial situation does not indicate that this condition will change.

This portfolio contains all the customers who are not in the substandard portfolio, nor the defaulted portfolio.

- Substandard Portfolio: This portfolio includes those customers with financial difficulties or a significant worsening of their capability to pay, and

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over which there are reasonable doubts about the repayment of capital and interest within the contractually agreed terms. They evidently struggle to meet their short-term financial obligations, and have arrears exceeding 30 days.

- Defaulted Portfolio: This portfolio includes loans where the possibility of recovery is considered remote, and there is evidence of a deteriorated or inexistent ability to pay. This portfolio includes customers that have arrears of interest or capital exceeding 90 days on any outstanding loan.

Risk categoriesQualitative and quantitative elements are assessed in order to select a borrower’s risk category and the required provision:

- The business situation and the industry or sector situation

- The directors and managers

- The financial situation and ability to pay

- The payment performance

Each risk category includes the following general concepts:

- A1, A2 and A3 are borrowers with High Credit Quality and a strong capability to meet their financial obligations.

- A4, A5 and A6 are borrowers with Good Credit Quality and sufficient capability to pay, but hat may be affected by market conditions.

- B1 and B2 are borrowers with Low Credit Quality that have been irregular in meeting their payment obligations of late.

- B3 and B4 are borrowers with Minimal Credit Quality, but the maximum payment arrears do not exceed 90 days.

Categories from C1 to C6 are used for borrowers whose loans have deteriorated and therefore are in default.

The provision percentages by risk category are:

PORTFOLIO RISK CATEGORY OF BORROWER PROVISION (%)Normal Portfolio A1 0.0360

A2 0.0825A3 0.2187A4 1.7500A5 4.2750A6 9.0000

Substandard Portfolio B1 13.8750B2 20.3500B3 32.1750B4 43.8750

The Bank assigns the following provision percentages to borrowers in the defaulted portfolio.

RISK CATEGORY RANGE OF EXPECTED LOSS PROVISION (%)C1 Between 0% and 3% 2C2 Between 3% and 20% 10C3 Between 20% and 30% 25C4 Between 30% and 50% 40C5 Between 50% and 80% 65C6 Over 80% 90

Model 2: Group provisionsThe provisions required for consumer and housing loans have been calculated on the basis of estimated losses on default and the probability of default, which are evaluated for each customer using a statistical model based on the characteristics of borrowers and their internal and external payment behavior.

Currently the Bank has three models of group assessment, which are segregated into:

- Normal loans (consumer and housing):These are all the consumer loans and housing loans whose installment payment method is by automated collection from a current account or credit card account or by means other than payroll deduction.

- Payroll deduction loans:These are all consumer loans whose installment payment method is by agreed payroll deduction either through a company, an insurance company, trade unions, associations, etc.

- Renegotiated loans:These are all the renegotiated loans, for both normal and payroll deduction loans. Banco Consorcio renegotiates loans by common agreement with its customers and provides new credit terms to eliminate the previous obligation.

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Each model allows the risk of each portfolio to be differentiated in an appropriate manner, identifying the variables that best explain its potential future losses.

Portfolios of mutual endorsable mortgages (housing and general purpose), purchased mortgages and credit cards use delinquency matrices.

3.4.13 Provisions and contingent liabilities

Provisions are liabilities involving uncertainty about their amount or maturity. Provisions are recognized in the statement of financial position when all the following requirements are met:

- A current obligation exists as a result of past events, and at the date of the financial statements it is likely that the bank will disburse resources to clear the obligation, and whose value can be measured in a reliable manner.

- A contingent asset or liability is any right or obligation arisen from past events whose existence will be confirmed only if one or more uncertain future event occurs not within the control of the Bank.

3.4.14 Disposals of financial assets and liabilities

The accounting treatment of financial assets transfers depends on the degree and the manner in which the risks and rewards associated with the transferred assets are passed to third parties:

1. If the risks and rewards are substantially transferred to third parties, the financial asset is transferred out of the statement of financial position, simultaneously recognizing any right or obligation retained or created as a result of the transfer. This applies to unconditional sales, to sales with a repurchase agreement at fair value at the repurchase date, to sales of financial assets with a purchased call option or written put option that is deeply out of the money, to the use of assets where the assignor has no subordinated debt nor provides any kind of credit enhancement to the new asset owner, and other similar cases.

2. If substantially all the risks and rewards associated with the financial asset transferred are retained, the transferred financial asset is not removed from the statement of financial situation and continues to be valued using the same criteria used before the transfer. This applies to the sales of financial assets with repurchase agreements at a fixed price or at the sale price plus interest, to contracts for loaned securities in which the borrower has the obligation to return the same or similar assets, and other similar cases. Otherwise, the following is recorded in accounting:

i) An associated financial liability is recognized for an amount equal to the consideration received, which is subsequently valued at its amortized cost.

ii) Also, the earnings of the financial asset transferred (but not removed from the statement of financial position) and the costs of the new financial liability are recognized.

3. If substantially all the risks and rewards associated with the financial asset transferred are not transferred nor retained, as in the case of sales of financial assets with a purchased call option or written put option that are not deeply in or out of the money, or when the transferor assumes subordinated debt or other types of credit enhancement for part of the asset transferred and other similar cases, then a distinction is made between:

i) When the transferor does not retain control of the financial asset transferred: the transferred financial asset is removed from the statement of financial situation, recognizing any rights or obligations retained or created as a result of the transfer.

ii) When the transferor retains control of the financial asset transferred: the transferred financial asset is not removed from the statement of financial situation and continues to be exposed to changes in value, whilst a financial liability is recognized associated with the financial asset transferred. The net amount of the asset transferred and the associated liability will be the amortized cost of the rights and obligations retained if the asset transferred is measured by its amortized cost, or the fair value of the rights and obligations retained if the asset transferred is measured by its fair value.

Accordingly, financial assets are only transferred out of the statement of financial position when rights to cash flow generated have expired or when the implicit risks and rewards have been substantially transferred to third parties. Likewise, financial liabilities are only transferred out of the statement of financial position when obligations generated have expired or when they are acquired with the intention of settling or reselling them.

3.4.15 Brokerage payables

These amounts are payable as a result of selling financial instruments traded on the stock exchange on behalf of customers. They are accounted for when billed and remain until paid. Amounts due to counterpart brokers on purchases are also included. In addition, accounts payable on installment transactions for repurchase agreements on behalf of the customer are included under this heading.

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NOTE 4 - ACCOUNTING ChANGES

During the fiscal year ending December 31, 2016, there have been no significant accounting changes that affect the presentation of these Consolidated Financial Statements.

NOTE 5 - OPERATING SEGMENTS

Grupo Consorcio discloses information per segment based on IFRS 8, “Operating Segments”, which establishes the standards for reporting on operating segments and disclosures.

Operating segments are as follows:

5.1 PARENT COMPANY AND OThERSThis segment groups the Parent Company and its subsidiaries, “Consorcio Inversiones Ltda.”, “Consorcio Inversiones Dos Ltda.”, “CF Cayman Ltd.”, Inmobiliaria Punta Pite S.A., Inmobiliaria Lote 18 S.A., Consorcio Servicios S.A., Consorcio Inversiones Financieras SpA., Const. e Inmobiliaria Presidente Riesco S.A., CF Inversiones Perú S.A.C. and Inversiones Continental Bio Bio SpA.

Their primary activities involve the development of investments and businesses in movable or immovable property and any other directly or indirectly related activity.

5.2 INSURANCE

a) Life Insurance

The main businesses or activities in this area include:

- All kinds of pension annuities: Normal retirement annuities, early retirement annuities, survivor annuities and disability annuities.

- Individual Voluntary Pension Savings (Ahorro Previsional Voluntario, APV) Insurance Fund.

- Survivors and Disability Insurance (Seguros de Invalidez y Sobrevivencia, SIS) from the national AFP system.

- Other individual life insurance products, including: Insurance with a sole investment account, term insurance, endowment insurance, whole life insurance, health insurance, family protection insurance.

- Group Insurance products, including: Term life insurance, health insurance and credit insurance.

- Private Placement Agent, Mutual Funds.

b) General insurance

The main businesses or activities in this area include:

- Auto insurance

- Obligatory personal accident insurance (Seguro Obligatorio de Accidentes Personales, SOAP)

- Residential fire insurance

- Other personal insurance policies: Theft, personal injury, extended warranty, fraud, earthquake and force majeure.

- Residential fire insurance

- Corporate fire insurance

- Other corporate insurance products: Engineering insurance, construction all risks insurance, earthquake insurance and force majeure insurance.

5.3 BANK AND SUBSIDIARIESThe main businesses or activities in this area include:

- Personal and corporate bank lending instruments

- Deposit accounts

- Current accounts

- Deposit accounts, current accounts

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- Working capital financing

- Project financing

- Leasing operations, document discount

- Housing Loans

- Consumer Loans

The main stock brokerage business activities are listed below:

i) The main businesses or activities conducted on behalf of third parties include:

- Purchase and sale of shares

- Purchase and sale of fixed-income instruments

- Simultaneous operations on behalf of clients

- Sales with repurchase agreement

- Mutual funds brokerage

- Purchase with resale agreement

- Brokerage of Banco Consorcio term deposits

ii) The business activities conducted on its own behalf include:

- Simultaneous transactions

- Forward contracts for US dollar currency transactions

- Purchase and sale of fixed-income instruments

- Purchase and sale of variable income instruments

- Purchase with resale agreement

Consorcio Financiero’s consolidated financial statements, by operating segment are as follows:

As of December 31, 2016

ASSETS

PARENT COMPANY AND OThERS

ThCh$INSURANCE

ThCh$

BANK AND SUBSIDIARIES

ThCh$CONSOLIDATED

ThCh$Cash and cash equivalents 707,418 5,208,448 27,408,375 33,324,241Current tax accounts receivable 1,852,600 2,509,785 4,419,391 8,781,776Related party receivables 747,288 22,721,990 - 23,469,278Other non-financial assets 259,033 45,650,084 32,607,922 78,517,039Trade and other receivables - 506,910,350 1,873,536,279 2,380,446,629Other financial assets 56,647,360 5,053,781,213 1,263,624,286 6,374,052,859Deferred tax assets 965,458 37,586,069 28,664,228 67,215,755Investments accounted for using the equity method 45,023,355 47,793,657 - 92,817,012Intangible assets other than goodwill 254,415 2,545,743 1,329,886 4,130,044Goodwill 6,587,046 1,335,834 - 7,922,880Property investments 4,685,496 417,504,074 - 422,189,570Property, plant and equipment 1,422 20,829,963 6,743,885 27,575,270

TOTAL ASSETS 117,730,891 6,164,377,210 3,238,334,252 9,520,442,353

LIABILITIES

Accounts payable to related companies: 411,786 - - 411,786Current tax liabilities 80,349 7,180,834 1,161,291 8,422,474Other non-financial liabilities 3,393,816 54,081,707 22,155,208 79,630,731Trade and other payables - 5,237,570,900 20,299,189 5,257,870,089Deferred tax payable 1,062,237 44,075,284 12,915,610 58,053,131Other financial liabilities 186,089,862 188,649,397 2,775,877,750 3,150,617,009Employee benefits provisions 168,573 9,086,300 2,567,226 11,822,099Other provisions 41,324,110 - 1,626,630 42,950,740

TOTAL LIABILITIES 232,530,733 5,540,644,422 2,836,602,904 8,609,778,059

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ASSETS


ThCh$INSURANCE

ThCh$


ThCh$CONSOLIDATED

ThCh$Cash and cash equivalents 1,954,425 12,216,057 59,296,351 73,466,833Current tax accounts receivable 26,745 4,940,148 5,613,956 10,580,849Related party receivables - 18,593,388 - 18,593,388Other non-financial assets 676,868 79,514,944 31,195,490 111,387,302Trade and other receivables - 477,361,521 1,605,733,533 2,083,095,054Other financial assets 57,985,862 4,524,277,010 965,877,422 5,548,140,294Deferred tax assets 820,719 35,878,279 35,264,696 71,963,694Investments accounted for using the equity method 39,703,298 53,831,021 - 93,534,319Intangible assets other than goodwill - 2,750,482 1,107,677 3,858,159Goodwill 6,527,325 852,852 - 7,380,177Property investments 4,501,268 366,393,814 - 370,895,082Property, plant and equipment 1,459 22,325,578 7,015,997 29,343,034

TOTAL ASSETS 112,197,969 5,598,935,094 2,711,105,122 8,422,238,185

LIABILITIES


ThCh$INSURANCE

ThCh$


ThCh$CONSOLIDATED

ThCh$Related party payables - 3,944,100 - 3,944,100Current tax liabilities 2,558,758 3,742,094 1,271,766 7,572,618Other non-financial liabilities 3,130,148 50,503,006 32,768,165 86,401,319Trade and other payables - 4,667,020,975 14,449,468 4,681,470,443Deferred tax payable 513,833 37,334,718 10,944,840 48,793,391Other financial liabilities 181,924,601 311,371,370 2,348,350,456 2,841,646,427Employee benefits provisions 125,792 7,847,105 2,170,992 10,143,889Other provisions 26,455,800 - 1,108,645 27,564,445

TOTAL LIABILITIES 214,708,932 5,081,763,368 2,411,064,332 7,707,536,632


NET INCOME STATEMENT


ThCh$INSURANCE

ThCh$


ThCh$CONSOLIDATED

ThCh$Revenue from ordinary activities 2,089,771 1,228,080,625 207,602,493 1,437,772,889Cost of sales (70,002) (1,008,971,027) (92,042,092) (1,101,083,121)GROSS PROFIT 2,019,769 219,109,598 115,560,401 336,689,768

Other income 99,997 6,876,714 1,131,379 8,108,090Administration expenses (3,500,995) (66,370,231) (39,846,023) (109,717,249)Other expenses, by function (8,207,529) (11,748,855) (1,226,211) (21,182,595)NET OPERATING INCOME (9,588,758) 147,867,226 75,619,546 213,898,014

Share of profits at associates and joint ventures accounted for using the equity method 3,470,433 2,244,269 - 5,714,702Exchange differences (572,758) (8,036,429) (14,027,712) (22,636,899)Losses on indexation (3,686,053) (25,948,364) - (29,634,417)Net income before tax (10,377,136) 116,126,702 61,591,834 167,341,400Expense for income tax 1,250,177 (20,070,569) (11,359,556) (30,179,948)NET INCOME FROM CONTINUING OPERATIONS (9,126,959) 96,056,133 50,232,278 137,161,452

Net income from discontinued operationsNet income (9,126,959) 96,056,133 50,232,278 137,161,452Net Income attributable toshareholders of the parent company (9,046,605) 95,958,347 50,232,278 137,144,020Minority interests (80,354) 97,786 - 17,432NET INCOME (9,126,959) 96,056,133 50,232,278 137,161,452

158

07 CH

AP.



NET INCOME STATEMENT


ThCh$INSURANCE

ThCh$


ThCh$CONSOLIDATED

ThCh$Revenue from ordinary activities 13,758,772 1,018,082,958 155,733,613 1,187,575,343 Cost of sales - (880,823,662) (109,173,336) (989,996,998) GROSS PROFIT 13,758,772 137,259,296 46,560,277 197,578,345

Other income 187,499 6,018,496 591,787 6,797,782 Administration expenses (815,821) (54,744,243) (31,804,888) (87,364,952) Other expenses, by function (5,754,293) (11,759,892) (756,958) (18,271,143) NET OPERATING INCOME 7,376,157 76,773,657 14,590,218 98,740,032

Share of profits at associates and joint ventures accounted for using the equity method 1,057,293 4,635,995 - 5,693,288 Exchange differences 2,458,250 16,733,014 22,153,196 41,344,460

Losses on indexation (5,837,176) (37,705,028) - (43,542,204)

NET INCOME BEFORE TAX 5,054,524 60,437,638 36,743,414 102,235,576 Expense for income tax (652,710) (7,952,518) (5,441,612) (14,046,840) NET INCOME FROM CONTINUING OPERATIONS 4,401,814 52,485,120 31,301,802 88,188,736

Profit (loss) from discontinued operationsNET INCOME 4,401,814 52,485,120 31,301,802 88,188,736 Net Income attributable toshareholders of the parent company 4,447,130 52,437,070 31,301,802 88,186,002 Minority interests (45,316) 48,050 - 2,734 NET INCOME 4,401,814 52,485,120 31,301,802 88,188,736

Cash flow statement, direct method - Consolidated financial statements As of December 31, 2016

CONSOLIDATED CASh FLOW STATEMENT

PARENT COMPANY

AND OThERS INSURANCE

BANK AND SUBSIDIARIES ADJUSTMENTS TOTAL

PROCEEDS FROM OPERATING ACTIVITIES 203,308,070 827,971,926 35,279,722 (99,268,992) 967,290,726 Proceeds from the sale of goods and services 1,599,062 - - - 1,599,062 Proceeds from royalties, fees, commissions and other income from ordinary activities 199,958,916 (143,704,613) 9,341,519 - 65,595,822 Proceeds from contracts held for brokerage or trading purposes - - 13,276,949 - 13,276,949 Proceeds from premiums and claims, annuities and other benefits arising on policies underwritten 227,645 938,574,418 - (96,043,428) 842,758,635 Proceeds from other operating activities 1,522,447 33,102,121 12,661,254 (3,225,564) 44,060,258

PAYMENTS FOR OPERATING ACTIVITIES (203,323,851) (796,856,716) (109,484,633) 99,268,992 (1,010,396,208) Payments to suppliers for goods and services (8,202,463) (119,507,398) (4,758,792) - (132,468,653) Payments arising from contracts held for brokerage or trading (194,685,646) (60,665,670) (81,553,898) - (336,905,214) Payments to and on behalf of employees (435,742) - (993,135) - (1,428,877) Payments for premiums and claims, annuities and other obligations arising on policies underwritten - (615,250,774) - 95,138,793 (520,111,981) Payments for other operating activities - (1,432,874) (22,178,808) 4,130,199 (19,481,483)

PROCEEDS FROM (PAYMENTS FOR) OPERATIONS 66,477,656 (10,883,230) 7,133,754 (65,439,586) (2,711,406) Dividends received 66,666,526 9,639,791 - (65,439,586) 10,866,731 Interest paid - - (12,790,493) - (12,790,493) Interest received - - 21,877,975 - 21,877,975 Income taxes paid (refunded) (188,870) (20,523,021) (1,953,728) - (22,665,619)

NET PROCEEDS FROM (PAYMENTS FOR) OPERATING ACTIVITIES 66,461,875 20,231,980 (67,071,157) (65,439,586) (45,816,888)

PROCEEDS FROM (PAYMENTS FOR) INVESTING ACTIVITIESCash flows used to obtain control of subsidiaries or other businesses (94,147,678) (264,051) - 94,264,053 (147,676) Loans to related companies (268,490) - - - (268,490) Proceeds from disposals of property, plant and equipment - 261,269 - - 261,269 Acquisitions of property, plant, and equipment (250) (2,033,187) (338,426) - (2,371,863) Acquisitions of intangible assets (218,144) - (612,020) - (830,164) Proceeds from other long-term assets - 165,694,734 - - 165,694,734 Acquisition of other long-term assets - (183,307,166) - - (183,307,166) Dividends received - - 155,292 - 155,292 Other proceeds (payments) 3,122 - - - 3,122

PROCEEDS FROM (PAYMENTS FOR) INVESTING ACTIVITIES (94,631,440) (19,648,401) (795,154) 94,264,053 (20,810,942)

PROCEEDS FROM (PAYMENTS FOR) FINANCING ACTIVITIESProceeds from share issues 94,047,250 47,001,133 47,000,000 (94,264,053) 93,784,330 Proceeds from short-term loans - 66,641 (105,403) - (38,762) Loans from related companies 4,667,909 - - (3,637,376) 1,030,533 Loan repayments (8,367,447) 4,765,411 - 3,635,959 33,923 Loans to related companies - (11,803,031) - 1,417 (11,801,614) Dividends paid (63,451,333) (28,468,308) (17,695,984) 65,439,586 (44,176,039) Interest paid - (19,205,805) - - (19,205,805)

PROCEEDS FROM (PAYMENTS FOR) FINANCING ACTIVITIES 26,896,379 (7,643,959) 29,198,613 (28,824,467) 19,626,566

EFFECT OF EXChANGE RATE FLUCTUATIONS ON CASh AND CASh EQUIVALENTS 26,179 52,771 139,981 - 218,931 EFFECT OF EXChANGE RATE FLUCTUATIONS ON CASh AND CASh EQUIVALENTS 26,179 52,771 139,981 - 218,931

NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS (1,247,007) (7,007,609) (38,527,717) - (46,782,333) CASh AND CASh EQUIVALENTS AT ThE BEGINNING OF ThE PERIOD 1,954,425 12,216,057 74,203,496 88,373,978 CASh AND CASh EQUIVALENTS AT ThE END OF ThE PERIOD 707,418 5,208,448 35,675,779 - 41,591,645

159


CONSOLIDATED CASh FLOW STATEMENT

PARENT COMPANY AND

OThERS INSURANCEBANK AND

SUBSIDIARIES ADJUSTMENTS TOTAL PROCEEDS FROM OPERATING ACTIVITIES 25,074,075 812,595,716 38,255,159 - 875,924,950

Proceeds from the sale of goods and services 289,548 - - - 289,548 Proceeds from royalties, fees, commissions and other income from ordinary activities 24,734,204 5,280,673 11,892,802 474,571 42,382,250 Proceeds from contracts for brokerage or trading - - 19,362,297 - 19,362,297 Proceeds from premiums and claims, annuities and other benefits arising on policies underwritten - 799,165,032 - - 799,165,032 Proceeds from other operating activities 50,323 8,150,011 7,000,060 (474,571) 14,725,823

PAYMENTS FOR OPERATING ACTIVITIES (23,039,355) (732,490,274) (48,615,267) - (804,144,896) Payments to suppliers for goods and services (3,961,380) (116,926,328) (5,221,695) - (126,109,403) Payments arising from contracts for brokerage or trading (18,011,653) (88,725,949) (34,252,017) - (140,989,619) Payments to and on behalf of employees (225,377) - (1,203,911) - (1,429,288) Payments for premiums and claims, annuities and other obligations arising on policies underwritten - (526,735,741) - - (526,735,741) Other payments for operating activities (840,945) (102,256) (7,937,644) - (8,880,845)

PROCEEDS FROM (PAYMENTS FOR) OPERATIONS 74,404,707 (3,682,196) (79,329) (70,051,600) 591,582 Dividends received 72,517,362 15,037,837 - (70,051,600) 17,503,599 Interest paid - - (12,532,722) - (12,532,722) Interest received - - 14,559,222 - 14,559,222 Income taxes paid (refunded) 1,887,345 (18,720,033) (2,105,829) - (18,938,517)

NET PROCEEDS FROM (PAYMENTS FOR) OPERATING ACTIVITIES 76,439,427 76,423,246 (10,439,437) (70,051,600) 72,371,636

PROCEEDS FROM (PAYMENTS FOR) INVESTING ACTIVITIES Cash flows from the loss of control of subsidiaries or other businesses 16,141,398 - - - 16,141,398 Payments to obtain control of subsidiaries or other businesses (50,193,397) - - 50,193,397 - Cash flows used to acquire minority interests (36,226,562) - - - (36,226,562) Proceeds from disposals of property, plant and equipment - 450 - - 450 Acquisitions of property, plant, and equipment (702) (1,456,226) (354,617) - (1,811,545) Acquisitions of intangible assets - - (404,185) - (404,185) Proceeds from other long-term assets - 252,420,272 - - 252,420,272 Acquisition of other long-term assets - (274,162,862) - - - (274,162,862) Dividends received - - 141,089 - 141,089

PROCEEDS FROM (PAYMENTS FOR) INVESTING ACTIVITIES (70,279,263) (23,198,366) (617,713) 50,193,397 (43,901,945)

PROCEEDS FROM (PAYMENTS FOR) FINANCING ACTIVITIES Proceeds from share issues 38,131,500 - 12,061,897 (50,193,397) - Proceeds from long-term loans 32,051,597 - - - 32,051,597 Proceeds from short-term loans - 41,927 - - 41,927 Loans from related parties 606,591 - - (190,468) 416,123 Loan repayments (6,726,884) 8,694,931 (238,137) (2,621,828) (891,918) Loan payments to related companies - (9,314,882) - 2,812,296 (6,502,586) Dividends paid (69,557,880) (50,545,220) - 70,051,600 (50,051,500) Interest paid - (999,521) - - (999,521)

PROCEEDS FROM (PAYMENTS FOR) FINANCING ACTIVITIES (5,495,076) (52,122,765) 11,823,760 19,858,203 (25,935,878)

EFFECT OF EXChANGE RATE FLUCTUATIONS ON CASh AND CASh EQUIVALENTS (11,866) 10,847 - - (1,019) NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS 653,222 1,112,962 766,610 - 2,532,794 CASh AND CASh EQUIVALENTS AT ThE BEGINNING OF ThE PERIOD 1,301,203 11,103,095 73,436,886 85,841,184 CASh AND CASh EQUIVALENTS AT ThE END OF ThE PERIOD 1,954,425 12,216,057 74,203,496 - 88,373,978

160

07 CH

AP.


NOTE 6 - CASh AND CASh EQUIVALENTS

a) Cash and cash equivalents are as follows:

12-31-2016ThCh$

12-31-2015ThCh$

Cash floats 1,130,898 5,508,294Bank balances 32,193,343 67,958,539SUBTOTAL 33,324,241 73,466,833

Net transactions pending settlement (1) 8,267,404 14,907,145

TOTAL 41,591,645 88,373,978

b) Cash and cash equivalents by currency are as follows:

CASh AND CASh EQUIVALENTS

CURRENCY AS OF DECEMBER 31, 2016ChILEAN PESOS

ThCh$US DOLLAR

ThCh$EURO

ThCh$OThERThCh$

TOTALThCh$

Cash floats 880,873 196,737 50,599 2,689 1,130,898Bank balances 24,850,752 4,296,646 3,045,945 - 32,193,343SUB TOTAL CASh AND CASh EQUIVALENTS 25,731,625 4,493,383 3,096,544 2,689 33,324,241

Net operations pending settlement (1) 6,676,791 1,558,847 31,766 - 8,267,404

TOTAL CASh AND CASh EQUIVALENTS 32,408,416 6,052,230 3,128,310 2,689 41,591,645

CASh AND CASh EQUIVALENTS

CURRENCY AS OF DECEMBER 31, 2015ChILEAN PESOS

ThCh$US DOLLAR

ThCh$EURO

ThCh$OThERThCh$

TOTALThCh$

Cash floats 5,302,310 162,966 40,072 2,946 5,508,294Bank balances 33,248,344 32,548,325 445,626 1,716,244 67,958,539SUB TOTAL CASh AND CASh EQUIVALENTS 38,550,654 32,711,291 485,698 1,719,190 73,466,833

Net operations pending settlement (1) 6,373,295 8,408,048 125,802 - 14,907,145

TOTAL CASh AND CASh EQUIVALENTS 44,923,949 41,119,339 611,500 1,719,190 88,373,978

(I) Net transactions at Banco Consorcio, which are effective within 24 hours. This balance is registered in the other financial assets account for ThCh$ 12,144,861 (ThCh$ 60,164,668 as of December 31, 2015) and in other financial liabilities for ThCh$ 3,877,457 (ThCh$ 45,257,523 as of December 31, 2015). It is presented within this note only for the purposes

of conciliation with the cash flow statement.

NOTE 7 – CURRENT TAX ACCOUNTS RECEIVABLE

Current tax accounts receivable were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

Monthly provisional tax payments 2,606,766 4,578,669Recoverable income taxes 715,315 510,278Credits for training expenses 213,952 352,877Donation credits - 22,478VAT recoverable 2,754,875 2,668,896Remaining tax credit 2,320,742 2,296,615Others 170,126 151,036TOTAL 8,781,776 10,580,849

161

NOTE 8 – BALANCES AND TRANSACTIONS WITh RELATED PARTIES

a) Accounts receivable from related nonconsolidated companies were as follows:


2016

ChILEAN ID NUMBER COMPANY COUNTRY RELATIONShIP

TRANSACTION DESCRIPTION CURRENCY

BALANCE AS OF 12-31-2016

ThCh$76.071.935-8 Aaktei Energía SpA Chile Associate Current account UF 4

76.409.386-0 Avsa Ñuñoa Hc SpA Chile AssociateCurrent account with promissory note

UF 314,150

56.064.770-5 Comunidad Santo Tomas Chile Associate Current account UF 150,444 99.564.920-9 Constructora e Inmobiliaria Edificio Tres S.A. Chile Associate Current account UF 15,658 96.586.380-4 Constructora e Inmobiliaria del Parque S.A. Chile Associate Current account UF 29,368 99.599.540-9 Inmobiliaria Alta Vista S.A. Chile Associate Current account UF 135,092 76.468.394-3 Inmobiliaria Alto Reloncavi S.A. Chile Associate Current account UF 298,812 76.233.018-0 Inmobiliaria Armas Move S.A. Chile Associate Current account UF 1,258 76.231.874-1 Inmobiliaria Calama SpA Chile Associate Current account UF 963,034 76.587.886-1 Inmobiliaria Desarrollo Industriales SpA Chile Associate Current account UF 49,651 76.563.450-4 Inmobiliaria Desarrollo Sur S.A. Chile Associate Current account UF 143 76.009.849-3 Inmobiliaria El Montijo II S.A. Chile Associate Current account UF 2,379 76.641.360-9 Inmobiliaria Jardin Del Carmen S.A. Chile Associate Current account UF 29,937 76.027.704-5 Inmobiliaria Jardines de Cerrillos S.A. Chile Associate Current account UF 4,208,805 99.591.360-7 Inmobiliaria La Hacienda de Huechuraba S.A. Chile Associate Current account UF 154,610 76.283.072-8 Inmobiliaria Las Higueras S.A. Chile Associate Current account UF 1,083,814 76.349.920-0 Inmobiliaria Los Aromos S.A. Chile Associate Current account UF 11,545 76.883.240-4 Inmobiliaria Los Cipreses S.A. Chile Associate Current account UF 2,585,838 76.954.790-8 Inmobiliaria Los Condores S.A. Chile Associate Current account UF 2,151,163 76.416.293-5 Inmobiliaria Monte Santo 3 SpA Chile Associate Current account UF 377,216 96.953.940-8 Inmobiliaria Sol De Maipú S.A. Chile Associate Current account UF 666,076 76,576,572-2 InmobiliariaVia Poniente S.A. Chile Associate Current account UF 847,450 76.966.850-0 InmobiliariaVicenteValdés S.A. Chile Associate Current account UF 638 76.320.057-4 Inmobiliaria y Desarrolladora El Remanso SpA Chile Associate Current account UF 1,169,602

76.320.057-4 Inmobiliaria y Desarrolladora El Remanso SpA Chile AssociateCurrent account with promissory note

UF 1,767,918

76,515,769-2 Inversiones El Pinar SpA Chile Associate Current account UF 747,284

76.039.786-5 Inversiones Inmobiliaria Seguras S.A. Chile AssociateCurrent account with promissory note

UF 5,707,389

TOTAL 23,469,278


2015




ThCh$

76.409.386-0 Avsa Ñuñoa Hc SpA Chile AssociateCurrent account with promissory note

UF 373,100

76.409.386-0 Avsa Ñuñoa Hc SpA Chile Asociadas Current account UF 73,206 56.064.770-5 Comunidad Santo Tomas Chile Asociadas Current account UF 146,339 99.564.920-9 Constructora E Inmobilairia Edificio Tres S.A. Chile Asociadas Current account UF 14,928 96.586.380-4 Constructora E Inmobiliaria Del Parque S.A. Chile Asociadas Current account UF 96,930 99.599.540-9 Inmobilairia Alta Vista S.A. Chile Asociadas Current account UF 233,924 76.646.780-6 Inmobilairia El Montijo S.A. Chile Asociadas Current account UF 1,448,305 76.468.394-3 Inmobiliaria Alto Reloncavi S.A. Chile Asociadas Current account UF 287,739 76.233.018-0 Inmobiliaria Armas Move S.A. Chile Asociadas Current account UF 1,500,285 76.563.450-4 Inmobiliaria Desarrollo Sur S.A. Chile Asociadas Current account UF 139 76.009.849-3 Inmobiliaria El Montijo Ii S.A. Chile Asociadas Current account UF 2,510 76.641.360-9 Inmobiliaria Jardín Del Carmen S.A. Chile Asociadas Current account UF 29,120 76.027.704-5 Inmobiliaria Jardines De Cerrillos S.A. Chile Asociadas Current account UF 3,646,573 99.591.360-7 Inmobiliaria La Hacienda De Huechuraba S.A. Chile Asociadas Current account UF 20,076 76.283.072-8 Inmobiliaria Las Higueras S.A. Chile Asociadas Current account UF 462,934 76.349.920-0 Inmobiliaria Los Aromos S.A. Chile Asociadas Current account UF 10,889 76.883.240-4 Inmobiliaria Los Cipreses S.A. Chile Asociadas Current account UF 1,766,896 76.954.790-8 Inmobiliaria Los Condores S.A. Chile Asociadas Current account UF 1,553,553 76.416.293-5 Inmobiliaria Monte Santo 3 SpA Chile Asociadas Current account UF 326,117 96.953.940-8 Inmobiliaria Sol De Maipú S.A. Chile Asociadas Current account UF 657,232 76.966.850-0 Inmobiliaria Vicente Valdés S.A. Chile Asociadas Current account UF 615 76.320.057-4 Inmobiliaria Y Desarrolladora El Remanso SpA Chile Asociadas Current account UF 405,759 76.320.057-4 Inmobiliaria Y Desarrolladora El Remanso SpA Chile Asociadas Current account UF 1,675,361 76.039.786-5 Inversiones Inmobiliaria Seguras S.A. Chile Asociadas Current account UF 3,860,858

TOTAL 18,593,388

162

07 CH

AP.


b) Accounts payable to related companies were as follows:





ThCh$76.071.935-8 Aaktei Energía SpA Chile Associate Current account UF 7,88776,515,769-2 Inversiones El Pinar SpA Chile Associate Current account UF 352,06976.282.829-4 Empresa Eléctrica El Pinar SpA Chile Associate Current account UF 51,830

TOTAL 411,786





ThCh$96.844.470-0 Piedra Roja Desarrollos Inmobiliarios S.A. Chile Associate Current account UF 3,944,100

TOTAL 3,944,100

The mercantile current accounts with associates are used to finance the working capital of real estate companies in which Consorcio Financiero S.A. has a share, whether directly or through its subsidiaries. This financing is provided by all shareholders at these companies under the same conditions, in proportion to their share. The accounts are denominated in UF and their estimated duration is based on each of the real estate developments involved. These current accounts are not considered uncollectable.

163

c) Transactions with related parties


RELATED ENTITYChILEAN ID

NUMBER RELATIONShIP TRANSACTION DESCRIPTIONAMOUNT

ThCh$

EFFECT ON NET INCOME

ThCh$Aaktei Energía SpA 76.071.935-8 Director Art 100 Stock Market Law Current Account Contribution 4 Aaktei Energía SpA 76.071.935-8 Director Art 100 Stock Market Law Current Account Contribution 20 Agricola y Comercial del Mar S.A. 84.774.400-6 Senior Executive Art 100 Stock Market Law Commercial loans 2,595,081 44,752 Alvaro Larrain Prieto 12.049.936-K Senior Executive Housing loans 35,139 1,858 Alvaro Larrain Prieto 12.049.936-K Senior Executive Savings accounts and time deposits 2,146 (36) Ana María Rivera Tavolara 12.094.411-8 Director Art 100 Stock Market Law Savings accounts and time deposits 21,616 (275) Andrea Godoy Fierro 9.605.872-1 Director Brokerage on forward transactions 82,061 - Andrea Godoy Fierro 9.605.872-1 Director Financing transactions 147,120 (347) Aníbal Correa Riesco 22.893.239-6 Senior Executive Art 100 Stock Market Law Term Deposit - Mutual Fund 128 - Banvida S.A. 96.882.560-7 Shareholder Dividend payments 20,192,564 - Bernardita Correa Concha 10.548.927-7 Senior Executive Brokerage on forward transactions 608 11 Bp S.A. 96.904.900-7 Shareholder Dividend payments 2,693,746 - Carlos Gotelli Marambio 4.683.033-4 Director Term Deposit - Mutual Fund 203 Cencosud 93.834.000-5 Senior Executive Art 100 Stock Market Law Investments acquired for trading 16,190,526 2,264 Christine Burq Cerón 16.958.722-1 Director Term Deposit - Mutual Fund 17,339 CIC S.A. 93.830.000-3 Senior Executive Art 100 Stock Market Law Commercial loans 580,698 18,979 CIC S.A. 93.830.000-3 Senior Executive Art 100 Stock Market Law Contingent Loans 161,831 - Clemente Correa Riesco 22.230.372-9 Senior Executive Art 100 Stock Market Law Term Deposit - Mutual Fund 241 - Constructora e Inmobiliaria Alonso de Córdova S.A. 76.210.019-3 Senior Executive Art 100 Stock Market Law Commercial loans 51,421,359 153,558 Constructora e Inmobiliaria Alonso de Córdova S.A. 76.210.019-3 Senior Executive Art 100 Stock Market Law Contract Performance Loans 588,221 2,545 Constructora e Inmobiliaria Alonso de Córdova S.A. 76.210.019-3 Associate with over 10% Acquisition of Parque Oriente Building 10,083,737 Constructora E Inmobiliaria Del Parque S.A. 99.586.380-4 Associate with over 10% Current Account Repayment 69,991 Desarrollos Inmobiliarios y Constructora Valle Grande S.A.

76.928.290-4 Senior Executive Art 100 Stock Market Law Commercial loans 7,359,273 86,627

Desiderio Enrique Silva Barros 4.707.752-4 Senior Executive Savings accounts and time deposits 82,270 (437) El Bosque Fip 76.246.548-5 Shareholder Dividend payments 507,026 - El Bosque S.A. 99.559.450-1 Senior Executive Art 100 Stock Market Law Term Deposits 2,500,000 (94,792) Empresa Eléctrica El Pinar SpA 76.282.829-4 Director Art 100 Stock Market Law Current Account Contribution 51,830 Enrique Larrain Hernandez 9.854.697-9 Senior Executive Savings accounts and time deposits 44,864 (164) Evelyn de los Angeles Figueroa Zamora 11.484.180-3 Senior Executive Housing loans 14,062 2,590 Felipe Correa Concha 16.366.453-4 Senior Executive Brokerage on forward transactions 1,110,547 1,146 Felipe Correa Concha 16.366.453-4 Senior Executive Brokerage on forward transactions 91,136 127 Fernando Agüero Aguirre 10.974.953-2 Senior Executive Savings accounts and time deposits 60,930 695 Fernando Martinez Santana 12.403.459-0 Director Art 100 Stock Market Law Term Deposit - Mutual Fund 184 - Foodgroup S.A. 76.069.192-5 Senior Executive Art 100 Stock Market Law Commercial loans 837,652 16,411 Francisco Ignacio Ossa Guzman 7.771.373-5 Senior Executive Savings accounts and time deposits 439,993 (3,778) Francisco Peréz Ojeda 15.637.256-0 Senior Executive Brokerage on forward transactions 107,986 275 Francisco Peréz Ojeda 15.637.256-0 Senior Executive Brokerage on forward transactions 116,522 107 Francisco Peréz Ojeda 15.637.256-0 Senior Executive Term Deposit – Mutual Fund 5,938 - Gonzalo Arturo Gotelli Marambio 10.896.500-2 Director Art 100 Stock Market Law Term Deposit – Mutual Fund 8,150 - Hormigones Bicentenario S.A. 99.507.430-3 Principal Executive Art 100 Stock Market Law Commercial loans 10,290,595 101,177 Hormigones Bicentenario S.A. 99.507.430-3 Principal Executive Art 100 Stock Market Law Commercial loans 389,569 - Hormigones Bicentenario S.A. 99.507.430-3 Senior Executive Art 100 Stock Market Law Insurance derivatives exchange 602,746 - Inmob. Vicente Valdés S.A. 76.966.850-0 Senior Executive Art 100 Stock Market Law Commercial loans 629,090 2,866 Inmobiliaria Aguapiedra SpA. 76.455.471-K Associate with over 10% Capital increase 314,652 Inmobiliaria Aguas Claras SpA. 76.318.228-2 Associate with over 10% Capital reduction 118,009 Inmobiliaria Aguas Claras SpA. 76.318.228-2 Associate with over 10% Dividend distributions 157,839 Inmobiliaria Alta Vista S.A. 99.599.540-9 Associate with over 10% Land sold 287,253 108,785 Inmobiliaria Altas Cumbres S.A. 96.714.060-0 Senior Executive Art 100 Stock Market Law Commercial loans 445,026 5,650 Inmobiliaria Armas Move S.A. 76.233.018-0 Associate with over 10% Current account repayment 1,544,347 Inmobiliaria Armas Move S.A. 76.233.018-0 Associate with over 10% Dividend distributions 1,130,000 Inmobiliaria Buin Ltda 76.077.638-6 Director Art 100 Stock Market Law Commercial loans 6,094,198 59,407 Inmobiliaria Calama SpA. 76.231.874-1 Associate with over 10% Current account contribution 949,383 Inmobiliaria Desarrollo Sur S.A. 76.563.450-4 Associate with over 10% Dividend distributions 42,000 Inmobiliaria e Inversiones Nuevo Siglo Ltda. 76.327.090-4 Director Art 100 Stock Market Law Brokerage on forward transactions 87,204 - Inmobiliaria Edificios De Hacienda SpA. 76.326.533-1 Associate with over 10% Capital increase 215,152 Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Current account contribution 786,356 Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Current account repayment 2,238,567 Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Dividend distributions 2,993,089 Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Land sold 2,000,992 341,965 Inmobiliaria Hacienda De Huechuraba S.A. 99.591.360-7 Associate with over 10% Current account contribution 130,759 Inmobiliaria Jardines De Cerrillos S.A. 76.027.704-5 Associate with over 10% Current account contribution 336,224 Inmobiliaria Los Aromos S.A. 76.349.920-0 Associate with over 10% Capital reduction 200,000 Inmobiliaria Los Aromos S.A. 76.349.920-0 Associate with over 10% Capital reduction 25,000 Inmobiliaria Los Aromos S.A. 76.349.920-0 Associate with over 10% Dividend distributions 225,000 Inmobiliaria Los Aromos S.A. 76.349.920-0 Associate with over 10% Land sold 336,868 3,799 Inmobiliaria Los Cipreses S.A. 76.883.240-4 Director Art 100 Stock Market Law Property acquisition 13,838,889 1,158,159 Inmobiliaria Los Cipreses S.A. 76.883.240-4 Director Art 100 Stock Market Law Quarterly interest on property transaction commitment 293,408 293,408 Inmobiliaria Los Cipreses S.A. 76.883.240-4 Associate with over 10% Current account contribution 709,850 Inmobiliaria Los Cipreses S.A. 76.883.240-4 Associate with over 10% Interest on property transaction commitment 4,355 4,355 Inmobiliaria Los Cóndores S.A. 76.954.790-8 Associate with over 10% Current account contribution 530,433 Inmobiliaria Los Cóndores S.A. 76.954.790-8 Associate with over 10% Land sold 1,213,140 188,225 Inmobiliaria Los Maderos SpA. 76.216.575-9 Associate with over 10% Capital reduction 78,516 Inmobiliaria Los Maderos SpA. 76.216.575-9 Associate with over 10% Dividend distributions 190,215 Inmobiliaria Los Robles SpA. 76.455.482-5 Associate with over 10% Capital increase 307,119 Inmobiliaria Montepiedra SpA. 76.213.015-7 Associate with over 10% Capital reduction 132,050 Inmobiliaria Montepiedra SpA. 76.213.015-7 Associate with over 10% Dividend distributions 501,251

164

07 CH

AP.




ThCh$


ThCh$Inmobiliaria Pc 50 SpA. 76.435.779-5 Associate with over 10% Capital increase 180,000Inmobiliaria Pc 50 SpA. 76.435.779-5 Associate with over 10% Capital increase 70,000Inmobiliaria San Nicolas Norte SpA. 76.209.105-4 Associate with over 10% Capital reduction 940,000Inmobiliaria San Nicolas Norte SpA. 76.209.105-4 Associate with over 10% Dividend distributions 320,000Inmobiliaria Sol De Maipú S.A. 96.953.540-8 Associate with over 10% Current account repayment 48,485Inmobiliaria Vicente Valdés S.A. 76.966.850-0 Associate with over 10% Capital reduction 458,902Inmobiliaria Vicente Valdés S.A. 76.966.850-0 Associate with over 10% Dividend distributions 273,310Inmobiliaria Y Desarrolladora El Remanso SpA. 76.320.057-4 Associate with over 10% Current account contribution 715,280Intergroupe S.A. 76.719.470-6 Senior Executive Art 100 Stock Market Law Contract Performance Loans 147,072 -Inversiones El Montijo S.A. 76.646.780-6 Senior Executive Art 100 Stock Market Law Commercial loans 2,965,178 44,445Inversiones El Montijo S.A. 76.646.780-6 Senior Executive Art 100 Stock Market Law Contract Performance Loans 4,039,373 30,896Inversiones El Pinar SpA 76.515.769-2 Director Art 100 Stock Market Law Current account contribution 747,284Inversiones El Pinar SpA 76.515.769-2 Director Art 100 Stock Market Law Current account contribution 352,069Inversiones Inmobiliarias Seguras S.A. 76.039.786-5 Associate with over 10% Current account contribution 1,732,451Inversiones LD. Limitada 76.307.143-K Senior Executive Brokerage on forward transactions 579,835 138Inversiones LD. Limitada 76.307.143-K Senior Executive Brokerage on forward transactions 580,000 138Inversiones LD. Limitada 76.307.143-K Senior Executive Financing transactions 602,642 (103)Jaime Riquelme Bravo 10.831.047-2 Senior Executive Housing loans 6,237 75Jose Correa Riesco 22.893-256-6 Senior Executive Art 100 Stock Market Law Term Deposit - Mutual Fund 31 -Juan José Hurtado Vicuña 5.715.251-6 Director Art 100 Stock Market Law Commercial loans 4,002,158 15,275Mara Forer Iagolnitzer 8.209.457-1 Senior Executive Savings accounts and time deposits 1,860 (38)Marcela Cerón Cerón 6.001.382-9 Director Brokerage on forward transactions 24,614 19Marcela Cerón Cerón 6.001.382-9 Director Term Deposit - Mutual Fund 1,940 -Maria de la Luz Mendez Montes 13.233.338-6 Director Term Deposit - Mutual Fund 463Maria de la Luz Montes Cruzat 6.018.815-7 Director Term Deposit - Mutual Fund 300Maria del Pilar Lillo Dussaillant 14.123.602-4 Senior Executive Term Deposit - Mutual Fund 91Matias Correa Concha 10.548.922-6 Senior Executive Brokerage on forward transactions 127,112 363Matias Correa Concha 10.548.922-6 Senior Executive Brokerage on forward transactions 138,993 113Matias Correa Concha 10.548.922-6 Senior Executive Term Deposit - Mutual Fund 15,557 -Matias Lillo Dussaillant 16.018.532-5 Senior Executive Financing transactions 61,851 240Matias Lillo Dussaillant 16.018.532-5 Senior Executive Brokerage on forward transactions 13,195 22Matias Lillo Dussaillant 16.018.532-5 Senior Executive Term Deposit - Mutual Fund 11,500 -Michelle Ziegler Gonzalez 13.028.279-2 Director Term Deposit - Mutual Fund 600P&S S.A. 96.816.350-7 Shareholder Dividend payments 20,192,564 -Pablo Lillo Dussaillant 13.038.608-3 Senior Executive Brokerage on forward transactions 19,958 72Pablo Lillo Dussaillant 13.038.608-3 Senior Executive Term Deposit - Mutual Fund 24,374 -Pamela Patricia Flores Cifuentes 10.221.059-K Director Art 100 Stock Market Law Brokerage on forward transactions 3,602 -Pamela Patricia Flores Cifuentes 10.221.059-K Director Art 100 Stock Market Law Term Deposit - Mutual Fund 906 -Patricio Daniel Parodi Gil 8.661.203-8 Director Savings accounts and time deposits 764,248 (12,079)Paula Correa Concha 17.090.126-6 Senior Executive Brokerage on forward transactions 525Paula Correa Concha 17.090.126-6 Senior Executive Term Deposit - Mutual Fund 28Philippe Burq Cerón 16.079.682-0 Director Art 100 Stock Market Law Brokerage on forward transactions 11,385 -Philippe Burq Cerón 16.079.682-0 Director Art 100 Stock Market Law Term Deposit - Mutual Fund 9,298 -Piedra Roja Desarrollos Inmobiliarios S.A. 96.844.470-0 Associate with over 10% Current account contribution 4,035,700Piedra Roja Desarrollos Inmobiliarios S.A. 96.844.470-0 Associate with over 10% Capital reduction 2,996,817Piedra Roja Desarrollos Inmobiliarios S.A. 96.844.470-0 Associate with over 10% Dividend distributions 1,038,884Raimundo Luis Tagle Swett 10.063.614-K Director Savings accounts and time deposits 23,078 (223)Raimundo Luis Tagle Swett 10.063.614-K Director Brokerage on forward transactions 6,664 -Raimundo Tagle Ojeda 18.640.225-1 Director Art 100 Stock Market Law Term Deposit - Mutual Fund 1,087 -Ramiro Mendez Montes 12.855.415-7 Senior Executive Housing loans 20,966 6,432Ramiro Mendez Montes 12.855.415-7 Senior Executive Brokerage on forward transactions 5,000 -Ramiro Mendez Montes 12.855.415-7 Senior Executive Term Deposit - Mutual Fund 25,219 -Tobalaba Fip 76.246.552-3 Shareholder Dividend payments 507,026 -

217,437,598 2,585,697

165

c) Transactions with related parties




ThCh$


ThCh$Agromar S.A. 84.774.400-6 Senior Executive Art 100 Stock Market Law Commercial loans 3,140,789 181,210 Alvaro Larrain Prieto 12.049.936-k Senior Executive Art 100 Stock Market Law Housing loan 307,088 - Avsa Ñuñoa Hc SpA 76.409.386-0 Associate with over 10% Current account contribution 69,499 - Banados S.A. 82.321.000-0 Property and Management Factoring receivables 1,000 - Banados S.A. 82.321.000-0 Director Art 100 Stock Market Law Contract Performance Loans 101,331 1,273 Banvida S.A. 96.882.560-7 Shareholder Dividends 22,897,736 - Bp S.A. 96.904.900-7 Shareholder Dividends 3,054,624 - Cemento Búfalo S.A. 76.084.154-4 Owned Commercial loans 37,832 37,832 Cencosud. 93.834.000-5 Senior Executive Art 100 Stock Market Law Factoring receivables 16,472 - Cencosud. 93.834.000-5 Senior Executive Art 100 Stock Market Law Investments acquired for trading 16,593,000 - CIC S.A. 93.830.000-3 Senior Executive Art 100 Stock Market Law Commercial loans 4,925,385 47,200 CIC S.A. 93.830.000-3 Senior Executive Art 100 Stock Market Law Contingent loans 104,208 - Constr. E Inmob. Alonso de Córdova S.A. 76.210.019-3 Senior Executive Art 100 Stock Market Law Commercial loans 25,577,012 505,912 Constr. E Inmob. Alonso de Córdova S.A. 76.210.019-3 Senior Executive Art 100 Stock Market Law Contract Performance Loans 130,464 - Constructora Valle Grande 76.928.290-4 Senior Executive Art 100 Stock Market Law Commercial loans 73,290,689 115,139 El Bosque Fondo de Inversion Privado 76.246.548-5 Shareholder Dividends 574,952 - El Bosque S.A. 99.599.450-1 Director Art 100 Stock Market Law Term Deposits 2,500,000 (205,208) El Bosque S.A. 99.559.450-1 Director Art 100 Stock Market Law Lease 76,998 76,998 Fernando Agüero Aguirre 10.974.953-2 Senior Executive Art 100 Stock Market Law Term Deposits 60,471 (876) Foodgroup S.A. 76.069.192-5 Senior Executive Art 100 Stock Market Law Commercial loans 874,260 72,950 Francisco Ignacio Ossa Guzman 7.771.373-5 Director Art 100 Stock Market Law Term Deposits 279,993 (6,652) Fundacion Consorcio Nacional 71.456.900-7 Controlled by Director Art 100 Stock Market Law Repos on fixed income and financial brokering instruments 60,000 (37) Fundacion Consorcio Nacional 71.456.900-7 Controlled by Director Art 100 Stock Market Law Donations 125,000 - Fundacion Consorcio Nacional 71.456.900-7 Controlled by Director Art 100 Stock Market Law Fixed income purchase 106,000 7,638 Gonzalo Arturo Gotelli Marambio 10.896.500-2 Director Art 100 Stock Market Law Term Deposit - Mutual Fund 164,985 - Hormigones BSA 99.507.430-3 Senior Executive Art 100 Stock Market Law Commercial loans 4,469,124 278,734 Hormigones BSA 99.507.430-3 Senior Executive Art 100 Stock Market Law Insurance derivatives exchange 23,004 - Hormigones BSA 99.507.430-3 Senior Executive Art 100 Stock Market Law Insurance derivatives exchange 229,709 - Hurtado Vicuña Juan Jose 5.715.251-6 Director Art 100 Stock Market Law Commercial loans 439,377 66,965 Inmob. Altas Cumbres 96.714.060-0 Senior Executive Art 100 Stock Market Law Commercial loans 627,248 12,712 Inmob. Vicente Valdés S.A. 76.966.850-0 Senior Executive Art 100 Stock Market Law Commercial loans 7,575,440 179,583 Inmobiliaria Aguapiedra SpA. 76.455.471-K Associate with over 10% Capital Contribution 664,094 - Inmobiliaria Aguas Claras SpA. 76.318.228-2 Associate with over 10% Capital Contribution 452,665 - Inmobiliaria Alta Vista S.A. 99.599.540-9 Associate with over 10% Property transaction, remainder of plots Ab5 and Ab6 554,857 221,859 Inmobiliaria Alta Vista S.A. 99.599.540-9 Associate with over 10% Current account repayment 177,392 - Inmobiliaria Alto Reloncavi S.A. 76.468.394-3 Associate with over 10% Current account contribution 282,424 - Inmobiliaria Alto Reloncavi S.A. 76.468.394-3 Associate with over 10% Capital contribution 446,208 - Inmobiliaria Buin Limitada 76.077.638-6 Controlling Group Term Deposits 6,962 (6,962) Inmobiliaria Buin Limitada. 76.077.638-6 Director Art 100 Stock Market Law Commercial loans 2,994,188 - Inmobiliaria Desarrollo Sur S.A. 76.563.450-4 Associate with over 10% Dividends 86,195 - Inmobiliaria e Inversiones Nuevo Siglo Ltda. 76.327.090-4 Controlled by Director Art 100 Stock Market Law Term Deposit - Mutual Fund 225,541 - Inmobiliaria Edificios De Hacienda SpA 76.326.533-1 Associate with over 10% Capital contribution 23,554 - Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Current account contribution 1,478,710 - Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Current account repayment 1,543,076 - Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Dividends 1,433,776 - Inmobiliaria El Montijo S.A. 76.646.780-6 Associate with over 10% Land Sold 5,279,385 825,244 Inmobiliaria Jardín Del Carmen S.A. 76.641.360-9 Associate with over 10% Current account contribution 27,923 - Inmobiliaria Jardines De Cerrillos S.A. 76.027.704-5 Associate with over 10% Current account contribution 2,115,896 - Inmobiliaria La Hacienda De Huechuraba S.A. 99.591.360-7 Associate with over 10% Current account repayment 203,702 - Inmobiliaria La Hacienda De Huechuraba S.A. 99.591.360-7 Associate with over 10% Dividends 127,450 - Inmobiliaria Las Higueras S.A. 76.283.072-8 Associate with over 10% Current account contribution 254,333 - Inmobiliaria Lo Aguirre S.A. 96.845.630-K Owned Term Deposits 1,775 (1,775) Inmobiliaria Los Aromos S.A. 76.349.920-0 Associate with over 10% Land sold 1,214,589 795,875 Inmobiliaria Los Aromos S.A. 76.349.920-0 Associate with over 10% Dividends 247,548 - Inmobiliaria Los Arrayanes S.A. 99.577.930-7 Associate with over 10% Dividends 112,138 - Inmobiliaria Los Cipreses S.A. 76.883.240-4 Associate with over 10% Current account contribution 497,615 - Inmobiliaria Los Cipreses S.A. 76.883.240-4 Associate with over 10% Quarterly interest on property transaction commitment 6,918 6,918 Inmobiliaria Los Cóndores S.A. 76.954.790-8 Associate with over 10% Current account contribution 837,997 - Inmobiliaria Los Cóndores S.A. 76.954.790-8 Associate with over 10% Current account repayment 1,175,000 - Inmobiliaria Los Cóndores S.A. 76.954.790-8 Associate with over 10% Land sold 1,970,569 281,111 Inmobiliaria Los Maderos SpA. 76.216.575-9 Associate with over 10% Current account contribution 403,600 - Inmobiliaria Los Maderos SpA. 76.216.575-9 Associate with over 10% Current account repayment 394,952 - Inmobiliaria Los Maderos SpA. 76.216.575-9 Associate with over 10% Capital reduction 486,716 - Inmobiliaria Los Maderos SpA. 76.216.575-9 Associate with over 10% Dividends 317,901 - Inmobiliaria Los Robles SpA. 76.455.482-5 Associate with over 10% Capital contribution 656,835 - Inmobiliaria Monte Santo 3 SpA. 76.416.293-5 Associate with over 10% Current account contribution 345,548 - Inmobiliaria Montepiedra SpA. 76.213.015-7 Associate with over 10% Capital reduction 194,736 - Inmobiliaria Montepiedra SpA. 76.213.015-7 Associate with over 10% Dividends 268,505 - Inmobiliaria Pc 50 SpA 76.435.779-5 Associate with over 10% Capital contribution 2,150,000 - Inmobiliaria San Nicolas Norte Dos SpA. 76.320.132-5 Associate with over 10% Capital contribution 1,016,400 - Inmobiliaria San Nicolas Norte SpA. 76.209.105-4 Associate with over 10% Dividends 280,000 - Inmobiliaria Vicente Valdés S.A. 76.966.850-0 Associate with over 10% Current account repayment 167,674 - Inmobiliaria Y Desarrolladora El Remanso SpA. 76.320.057-4 Associate with over 10% Current account contribution 376,846 - Inversiones El Montijo 76.646.780-6 Senior Executive Art 100 Stock Market Law Contract Performance Loans 3,973,790 9,787 Inversiones El Montijo 76.646.780-6 Senior Executive Art 100 Stock Market Law Term Deposits 1,537,745 (3,178) Inversiones Inmobiliarias Seguras S.A. 76.039.786-5 Associate with over 10% Current account contribution 756,121 -

166

07 CH

AP.




ThCh$


ThCh$Inversiones Inmobiliarias Seguras S.A. 76.039.786-5 Associate with over 10% Devolución En Cuenta Corriente 3.914.626 -Inversiones Sodisa Limitada 76.642.430-9 Owned Depositos a Plazos 34.853 (34.853)Investment Holding S.A. 76.058.449-5 Owned Depositos a Plazos 11.560 (11.560)Jaime Riquelme 10.831.047-2 Senior Executive Art 100 Stock Market Law Créditos para Vivienda 128.531 -Jorge Parker Jimenez 10.797.107-6 Senior Executive Art 100 Stock Market Law Créditos Comerciales 1.283.064 -Los Parques S.A. 77.255.460-1 Senior Executive Art 100 Stock Market Law Créditos Comerciales 2.920.733 51.446Marcela Cerón Cerón 6.001.382-9 Director Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 169.396 -Maria Isidora Riutort Kreft 16.100.972-5 Senior Executive Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 345.354 -Martin Hurtado Menendez 12.978.201-5 Senior Executive Art 100 Stock Market Law Intermediación de Operaciones a Termino 410.957 847Martin Hurtado Menendez 12.978.201-5 Senior Executive Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 7.220.543 -Matias Correa Concha 10.548.922-6 Senior Executive Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 538.673 -Mendez Montes Ramiro 12.855.415-7 Senior Executive Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 662.411 -Mercurio S A P 90.193.000-7 Factoring receivables Créditos Factoring 1.000 -Minera e Inmobiliaria Cascada S.A. 96.845.630-K Controlling Group Depositos a Plazos 39.271 (39.271)Moneda Agencia de Valores Ltda 76.615.490-5 Owned Depositos a Plazos 8.288 (8.288)P&S S.A. 96.816.350-7 Shareholder Dividendo 22.897.736 -Pablo Lillo Dussaillant 13.038.608-3 Senior Executive Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 2.661.209 -Patricio Daniel Parodi Gil 8.661.203-8 Director Art 100 Stock Market Law Depositos a Plazos 429.155 (12.948)Pesquera Fiordo Austral S.A. 76.041.492-1 Owned Créditos Comerciales 6.907 6.907Philippe Burq Cerón 16.079.682-0 Director Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 58.338 -Piedra Roja Desarrollos Inmobiliarios S.A. 96.844.470-0 Associate with over 10% Aporte En Cuenta Corriente 585.646 -Piedra Roja Desarrollos Inmobiliarios S.A. 96.844.470-0 Associate with over 10% Dividendo 1.375.760 -Raimundo Tagle Ojeda 18.640.225-1 Director Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 85.794 -Raimundo Tagle Swett 10.063.614-K Director Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 477.461 -Renta Don Enrique S.A. 76.109.434-3 Senior Executive Art 100 Stock Market Law Créditos Comerciales 451.366 123.491Sebastian Bertelsen 17.088.327-6 Senior Executive Art 100 Stock Market Law Créditos para Vivienda 227.145 646Sebastián Bertelsen Mayol 17.088.327-6 Senior Executive Art 100 Stock Market Law Otros (Deposito a plazo - Fondo Mutuo) 685.299 -Tobalaba Fondo Inversión Privado 76.246.552-3 Shareholder Dividendo 574.952 -

TOTAL 254.409.567 3.576.669

NOTE 9 - OThER NON-FINANCIAL ASSETS

Other non-financial assets as of December 31, 2016 and 2015 were as follows:

12/31/2016ThCh$

12-31-2015ThCh$

OThER NON-FINANCIAL ASSETS -INSURANCESecurities to be deposited 248,612 367,272Salvage 575,117 400,741Custody 240,054 573,534Investments in health and mining licenses 61,055 61,059Property acquisition commitments 3,847,832 5,940,020Prepayments on real estate projects - 235,695Prepaid expenses 901,253 510,402Staff receivables 1,325,775 1,136,345Fixed and variable income accounts receivable 18,168,869 5,205,722Documents and accounts receivable 3,238,921 3,078,981Sundry debtors 3,253,533 4,190,577Brokerage accounts receivable 134,598 124,799Investment with purchase commitment 13,654,465 57,689,797

OThER NON-FINANCIAL ASSETS - BANKDocuments and accounts receivable 4,142,051 2,928,928Guarantees 22,700,593 27,055,633Sundry debtors 394,508 66,968Custody 5,370,770 1,143,961

OThER NON-FINANCIAL ASSETS - PARENT COMPANY AND OThERStaff receivables 4,219 4,809Documents and accounts receivable 188,177 184,272Sundry debtors 5,171 6,926Custody 53,426 479,580Others 8,040 1,281TOTAL 78,517,039 111,387,302

The accounting policy has been defined in Note 3.1.10 - Accounting Policies.

167

NOTE 10 – TRADE AND OThER RECEIVABLES

Trade and other receivables as of December 31, 2016 and 2015were as follows:

12/31/2016ThCh$

12-31-2015ThCh$

INSURANCEAccounts receivable from policyholders 53,446,567 58,102,935Accounts receivable from reinsurers 5,929,292 3,830,537Accounts receivable from leasing - CNS Vida (1) 402,884,015 369,414,856Accounts receivable from leasing - CN Life (2) 35,903,402 37,565,917Participation of reinsurance in reserves 10,559,744 9,754,501Impairment (1,812,670) (1,307,225)

BANK AND SUBSIDIARIESInterbank Loans 60,005,834 -Brokerage receivables 20,616,787 14,737,668Commercial loans 1,670,530,190 1,469,039,646Housing loans 84,466,197 76,878,932Consumer loans 69,658,635 70,868,537Impairment (31,741,364) (25,791,250)TOTAL 2,380,446,629 2,083,095,054

The accounting policy is described in Note 3.1.8.

1) ACCOUNTS RECEIVABLE FROM LEASING - CONSORCIO NACIONAL SEGUROS VIDA

a) Overview of the more important leases.

1. Leasing SR Inmobiliaria: Leasing contract signed in October 2009 with SR INMOBILIARIA S.A. (Subsidiary SMU) for an Unimarc distribution center, located at MACROLOT MLI-10 IZARRA LO AGUIRRE to one side of Highway 68. Began: October 2009

Term: 30 years.

2. Leasing Mall Puente III: Leasing contract signed in April 2011 with the shopping center Galería Imperio, located at 824 Huerfanos, Santiago. The contract counterpart is Mall Puente III Ltda. The leasing contract is for the purchase of the current shopping center, and then to finance the construction for the remodeling.

Began: April - 2011 Term: 25 years.

3. Leasing Cencosud Shopping Center : Leasing contracts with Cencosud Shopping Center S. A. signed in April 2005 for 6 shopping centers located in Osorno, Chillan, Los Angeles, Linares, Talca and Curico.


4. Leasing Inmobiliaria Edificio Corp Group: Leasing contract with Inmobiliaria Edificio Corp Group S.A. to finance the Corporate Building and Cultural Center located at Avenue Presidente Riesco 5685, Las Condes.

Began: January - 2008 Term: 23 years.

5. Leasing Córpora Agrícola: Leasing contract with Córpora Agrícola S.A. for estates located near San Felipe in the Fifth Region.


6. Leasing Inmobiliaria Boulevard: Leasing contract with Inmobiliaria Boulevard Nueva Costanera S.A. to purchase a plot on which a shopping center will be built, to become part of the leasing contract.

Began: August - 2012 Term: 25 years.

7. Leasing Inmobiliaria Enrique Foster Apoquindo: Leasing contract with Inmobiliaria Enrique Foster Apoquindo S.A. to finance a building located in Avenue Apoquindo.

Began: May - 2013 Term: 30 years.

168

07 CH

AP.


8. Leasing Mall Barrio Independencia: Leasing Contract with MBI SpA. The purpose of the leasing contracts was to purchase a plot on which a shopping center will be built, to become part of the leasing contract.

Began: December - 2014 Term: 22 years.

9. Leasing Los Militares: Lease contract with Inmobiliaria Los Militares Apoquindo S.A. to finance a building located in Apoquindo.


10. Leasing Torre Amunategui: Lease contract with Inmobiliaria Rentas II SpA. to finance a building located in Catedral, Santiago city center.


b) Provisions policy.

TIn accordance with current standards, provisions on overdue lease installments are created in the same month the installment fell due. The allowance includes interest, capital and value added tax, if applicable.

If property taxes have been paid by the lessor and have not been refunded by the lessee, a provision is created when they are 60 days overdue.

Where overdue amounts due have been renegotiated, the provision will be maintained in its entirety and only reversed against receipt of funds.

c) Unearned financial income.

The detail of unearned financial income appears in the column “Interest Receivable” in the attached table.

d) Contingent installments recognized in net income for the period.

To date contingent installments have not been recognized in net income for the period.

e) Unguaranteed residual values recognized in favor of the lessor.

Lease contracts do not contain unguaranteed residual values in favor of the Company.

f) Overview of significant lease agreements.

Inmobiliaria Radices S.A. prepaid their remaining leasing obligations on the property located at 146 Ejército, Santiago on November 2, 2016.

g) Accumulated provisions for uncollectable minimum payments on the outstanding lease receivable. The provisions are registered in accordance with the standard and are detailed in Accounting Policy note 3.3.2.

REMAINING YEARS ON LEASE

CONTRACT VALUE

COST VALUEAPPRAISAL

VALUEFINAL LEASE

VALUENOMINAL VALUEINTEREST

RECEIVABLE CURRENT VALUE IMPAIRMENT

FINAL CONTRACT

VALUE0 - 1 years - - - - - - - -1 – 5 years 8,152,490 848,465 8,175,321 - 8,175,321 28,286,394 38,030,099 8,175,321Over 5 years 387,868,380 231,814,618 394,708,694 892,196 393,816,498 485,675,661 553,542,363 393,816,498TOTAL 396,020,870 232,663,083 402,884,015 892,196 401,991,819 513,962,055 591,572,462 401,991,819

Outstanding capital: This is the outstanding amount excluding interest.Contract Value: Current value less impairment provisionNet cost value: Indexed cost less accumulated depreciationAppraisal value: Value of the lowest professional appraisalFinal lease value: The lowest value between the net current value, the net cost value and the appraisal value

(2) ACCOUNTS RECEIVABLE FROM LEASING - CN LIFE

a) Overview of the more important leases.

1. Leasing Inmobiliaria Piedra Roja: Leasing contract with Chicureo Desarrollos Inmobiliarios S.A. for 167 hectares located in the municipality of Colina. In addition, this lease includes another 47 hectares of land adjacent to the 167 hectares, with mortgages in favor of CN Life.

Began: January - 2002 Term: 20 years.

169

2. Leasing Caja Los Andes: Leasing contract with Caja Compensación Los Andes for the Corporate Building of Caja Compensación Los Andes located on the corner of Padre Alonso Ovalle and San Ignacio, Santiago.

Began: December-2006 Term: 20 years.

3. Leasing Inmobiliaria Radices: Leasing contract with Sociedad Inmobiliaria Radices S.A. for a property located on Av. Ejercito 146, used for educational purposes.

Began: November - 2005 Term: 20 years.

b) Provisions policy.

In accordance with current standards, provisions on overdue lease installments are created in the same month the installment fell due. The allowance includes interest, capital and value added tax, if applicable.

If property taxes have been paid by the lessor and have not been refunded by the lessee, a provision is created when they are 60 days overdue.

Where overdue amounts due have been renegotiated, the provision will be maintained in its entirety and only reversed against receipt of funds.

c) Unearned financial income.

The detail of unearned financial income appears in the column “Interest Receivable” in the attached table.

d) Contingent installments recognized in net income for the period.

To date contingent installments have not been recognized in net income for the period.

e) Unguaranteed residual values recognized in favor of the lessor.

Lease contracts do not contain unguaranteed residual values in favor of the Company.

f) Overview of significant lease agreements.

Inmobiliaria Radices S.A. prepaid their remaining leasing obligations on the property located at 146 Ejército, Santiago on November 2, 2016.

g) Accumulated provisions for uncollectible minimum payments on the outstanding lease receivable. The provisions are registered in accordance with the standard and are detailed in Accounting Policy note 3.3.2.

REMAINING YEARS ON LEASE

CONTRACT VALUE

COST VALUEAPPRAISAL

VALUEFINAL LEASE

VALUENOMINAL VALUEINTEREST

RECEIVABLE CURRENT VALUE IMPAIRMENT

FINAL CONTRACT

VALUE0 - 1 year - - - - - - - -1 - 5 years - - - - - - - -Over 5 years 35,798,135 18,879,880 35,903,402 - 35,903,402 52,506,969 31,886,823 35,903,402TOTAL 35,798,135 18,879,880 35,903,402 - 35,903,402 52,506,969 31,886,823 35,903,402

Outstanding capital: This is the outstanding amount excluding interest.Contract Value: Current value less impairment provisionNet cost value: Indexed cost less accumulated depreciationAppraisal value: Value of the lowest professional appraisalFinal lease value: The lowest value between the net current value, the net cost value and the appraisal value

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a) Impairment detail

AS OF DECEMBER 31, 2016

ASSETS BEFORE PROVISIONS

ThCh$

IMPAIRMENT PROVISIONS

ThCh$NET ASSETS

ThCh$TRADE DEBTORS Accounts receivable from policyholders 53,446,567 (1,497,792) 51,948,775Accounts receivable from reinsurers 5,929,292 (119,870) 5,809,422Accounts receivable from loan transactions 1,805,966,984 (29,830,156) 1,776,136,828Accounts receivable from factoring transactions 59,549,317 (1,911,208) 57,638,109Accounts receivable from leasing - CNS Vida 402,884,015 (195,008) 402,689,007Accounts receivable from leasing - CN Life 35,903,402 - 35,903,402Other current receivables 39,761,342 - 39,761,342Participation of reinsurance in reserves 10,559,744 - 10,559,744TOTAL 2,414,000,663 (33,554,034) 2,380,446,629


ASSETS BEFORE PROVISIONS

ThCh$

IMPAIRMENT PROVISIONS

ThCh$NET ASSETS

ThCh$TRADE DEBTORSAccounts Receivable from Policyholders 58,102,935 (768,098) 57,334,837Accounts receivable from reinsurers 3,830,537 (13,292) 3,817,245Accounts receivable from loan transactions 1,543,926,057 (23,975,818) 1,519,950,239Accounts receivable from factoring transactions 51,466,459 (1,815,432) 49,651,027Accounts receivable from leasing - CNS Vida 369,414,856 (525,835) 368,889,021Accounts receivable from leasing - CN Life 37,565,917 - 37,565,917Other current receivables 36,132,267 - 36,132,267Participation of reinsurance in reserves 9,754,501 - 9,754,501TOTAL 2,110,193,529 (27,098,475) 2,083,095,054

b) The portfolio analyzed by overdues is the following:


NUMBER OF CLIENTS NON-

RENEGOTIATED PORTFOLIO

GROSS NON-RENEGOTIATED

PORTFOLIOThCh$

NUMBER OF CLIENTS RENEGOTIATED

PORTFOLIO

GROSS RENEGOTIATED

PORTFOLIOThCh$

TOTAL PORTFOLIOThCh$

Portfolio not overdue 2,336,602 2,308,838,187 208 773,049 2,309,611,236Portfolio between 1 and 30 days 1,109 64,904,413 62 218,275 65,122,688Portfolio between 31 and 60 days 589 2,542,480 35 78,660 2,621,140Portfolio between 61 and 90 days 464 1,127,441 32 79,165 1,206,606Portfolio between 91 and 120 days 256 358,833 20 44,368 403,201Portfolio between 121 and 150 days 230 302,148 15 25,554 327,702Portfolio between 151 and 180 days 168 381,703 11 15,327 397,030Portfolio between 181 and 210 days 36 199,846 - - 199,846Portfolio between 211 and 250 days 38 198,671 - - 198,671Portfolio over 250 days 598 358,509 - - 358,509TOTAL UNSECURED PORTFOLIO 2,340,090 2,379,212,231 383 1,234,398 2,380,446,629


NUMBER OF CLIENTS NON-

RENEGOTIATED PORTFOLIO

GROSS NON-RENEGOTIATED

PORTFOLIOThCh$

NUMBER OF CLIENTS RENEGOTIATED

PORTFOLIO

GROSS RENEGOTIATED

PORTFOLIOThCh$

TOTAL PORTFOLIOThCh$

Portfolio not overdue 2,307,015 2,010,565,171 275 913,203 2,011,478,374Portfolio between 1 and 30 days 945 58,930,516 69 185,711 59,116,227Portfolio between 31 and 60 days 539 1,588,793 33 71,911 1,660,704Portfolio between 61 and 90 days 444 8,448,781 23 52,924 8,501,705Portfolio between 91 and 120 days 343 629,970 25 54,387 684,357Portfolio between 121 and 150 days 218 259,285 18 46,378 305,663Portfolio between 151 and 180 days 194 269,595 16 43,235 312,830Portfolio between 181 and 210 days 60 657,013 - - 657,013Portfolio between 211 and 250 days 56 120,878 - - 120,878Portfolio over 250 days 567 257,303 - - 257,303TOTAL UNSECURED PORTFOLIO 2,310,381 2,081,727,305 459 1,367,749 2,083,095,054

Consorcio Financiero S.A. and subsidiaries do not have a secured loan portfolio.

171

NOTE 11 – OThER FINANCIAL ASSETS

Other financial assets as of December 31, 2016 and 2015 were as follows:

12/31/2016ThCh$

12-31-2015ThCh$

Investments at amortized cost 4,019,013,234 3,727,916,651 Investments at fair value 2,355,039,625 1,820,223,643 TOTAL 6,374,052,859 5,548,140,294

A) INVESTMENTS BY CURRENCY BY TYPE Balance as of December 31, 2016

INSURANCE COMPANIESChILEAN PESOS

ThCh$US DOLLAR

ThCh$EURO

ThCh$AIV(*)

ThCh$UF

ThCh$OThERThCh$

TOTALThCh$

FINANCIAL ASSETS AT AMORTIZED COST FLOATING COMPANY BONDS - 16,343,347 - - - - 16,343,347 FOREIGN BANK BONDS - 54,627,598 - - - - 54,627,598 BANKS AND FINANCIAL INSTITUTIONS BONDS 711,390 - - - 11,593,480 - 12,304,870 BANKS AND FINANCIAL INSTITUTIONS BONDS (Single Investment Account)

- - - - 1,569,849 - 1,569,849

RECOGNITION BONDS 72,368,068 - - - - - 72,368,068 CORPORATE BONDS 48,314,236 28,799,074 - - 1,139,710,903 - 1,216,824,213 CORPORATE BONDS (Single Investment Account) - - - - 54,879,773 - 54,879,773 SECURITIZED BONDS - - - - 5,597,828 - 5,597,828 SECURITIZED BONDS (Single Investment Account) - - - - 6,964,655 - 6,964,655 BASE 360 SOVEREIGN BONDS - - 29,291,356 - - 12,728,026 42,019,382 SUBORDINATED BONDS - - - - 125,004,201 - 125,004,201 SUBORDINATED BONDS (Single Investment Account) - - - - 44,725,069 - 44,725,069 FOREIGN SUBORDINATED BONDS - 254,602,766 22,214,981 - - - 276,817,747 LEASED HOUSING BONDS - - - - 828,421 - 828,421 NATIONAL BANK BONDS ISSUED ABROAD - 6,425,025 - - - - 6,425,025 ZERO COUPON UF - - - - 14,460,755 - 14,460,755 CORPORATE BONDS - 379,144,937 12,775,672 - - 11,886,233 403,806,842 DOLLAR SYNDICATED LOANS - 45,460,688 - - - - 45,460,688 SIMPLE FLOATING 360 SYNDICATED LOANS 12,163,611 4,359,053 - - - - 16,522,664 SYNDICATED LOAN UF - - - - 95,770,877 - 95,770,877 SHORT-TERM DEPOSITS (Single Investment Account) 20,449 - - - - - 20,449 LONG-TERM DEPOSITS - - - - 1,578,547 - 1,578,547 LONG-TERM DEPOSITS (Single Investment Account) - - - - 2,403 - 2,403 FOREIGN BANK DEPOSITS AND PROMISSORY NOTES - 14,562,248 - - - - 14,562,248 MORTGAGE BILLS - - - - 4,038,866 10,659,203 14,698,069 MORTGAGE BILLS (Voluntary Pension Savings) - - - - 590,031 - 590,031 MORTGAGE BILLS (Single Investment Account) - - - - 17,682,086 - 17,682,086 MUTUAL MORTGAGES - - - - 25,867,191 538,326,378 564,193,569 STRUCTURED NOTES WITH COUPON - - - - 13,911,370 82,649,799 96,561,169 CORPORATE PROMISSORY NOTES - - - - - 144,489 144,489 SWAPS - 15,987,140 - - - - 15,987,140 NATIONAL YANKEE BONDS - 765,944,434 - - - - 765,944,434 TOTAL 133,577,754 1,586,256,310 64,282,009 - 1,564,776,305 656,394,128 4,005,286,506

FINANCIAL ASSETS AT FAIR VALUE -RECOGNITION BONDS 1,108,949 - - - - - 1,108,949 CORPORATE BONDS 4,196,513 - - - 12,035,138 - 16,231,651 SECURITIZED BONDS 3,233,404 - - - 574,755 - 3,808,159 SUBORDINATED BONDS - - - - 1,102,588 - 1,102,588 NATIONAL BANK BONDS ISSUED ABROAD - 685,633 - - - - 685,633 CORPORATE BONDS - 1,271,994 - - - - 1,271,994 MORTGAGE BILLS - - - - 627,570 - 627,570 NATIONAL YANKEE BONDS - 2,074,387 - - - - 2,074,387 SHARES IN PUBLIC COMPANIES 199,816,277 - - - - - 199,816,277 SHARES IN PRIVATE COMPANIES 1,952,026 995,499 - - - - 2,947,525 SHARES IN FOREIGN COMPANIES - 1,193,271 - - - - 1,193,271 INVESTMENT FUNDS 114,769,973 233,725,267 17,332,125 - - - 365,827,365 INVESTMENT FUNDS (Single Investment Account) 1,236,759 - - - - - 1,236,759 MUTUAL FUNDS 1,120,216 - - - - - 1,120,216 FOREIGN MUTUAL FUNDS - 7,011,526 - - - - 7,011,526 MUTUAL FUNDS (Voluntary Pension Savings) 363,583,620 74,213,409 - - - - 437,797,029 FORWARD - 4,633,808 - - - - 4,633,808 TOTAL 691,017,737 325,804,794 17,332,125 - 14,340,051 - 1,048,494,707

(*) Average Index Value.

172

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FINANCIAL ASSETS AT AMORTIZED COSTChILEAN PESOS

ThCh$US DOLLAR

ThCh$EURO

ThCh$AIV(*)

ThCh$UF

ThCh$OThERThCh$

TOTALThCh$

CORPORATE BONDS - - - - 184,787 - 184,787SHORT-TERM DEPOSITS 1,779 - - - - - 1,779LONG-TERM DEPOSITS - - - - - 1,395,301 1,395,301MORTGAGE BILLS 54,219 - - - - (54,219) -TOTAL 55,998 - - - 184,787 1,341,082 1,581,867

FINANCIAL ASSETS AT FAIR VALUESHARES IN PUBLIC COMPANIES 46,340,374 - - - - - 46,340,374SHARES IN PRIVATE COMPANIES 138,381 7,907,377 - - - - 8,045,758MUTUAL FUNDS 540,099 - - - - - 540,099FORWARDS - 139,262 - - - - 139,262TOTAL 47,018,854 8,046,639 - - - - 55,065,493

BANK AND SUBSIDIARIESChILEAN PESOS

ThCh$US DOLLAR

ThCh$EURO

ThCh$AIV(*)

ThCh$UF

ThCh$OThERThCh$

TOTALThCh$

FINANCIAL ASSETS AT AMORTIZED COSTRECEIVABLE DOCUMENTS 8,066,008 3,971,808 38,631 - - 68,414 12,144,861TOTAL 8,066,008 3,971,808 38,631 - - 68,414 12,144,861

FINANCIAL ASSETS AT FAIR VALUESHARES IN PRIVATE COMPANIES 2,321,418 - - - - - 2,321,418CORPORATE BONDS 70,010,197 488,223,688 - - 188,488,170 - 746,722,055BANKS AND FINANCIAL INSTITUTIONS BONDS 26,397,523 1,683,733 - - 78,068,210 - 106,149,466BCP BONDS 133,196,457 - - - 800,671 - 133,997,128BCU BONDS - - - - 45,152,869 - 45,152,869BTP BONDS 25,203,355 - - - 5,167,361 - 30,370,716BTU BONDS - - - - 14,561,942 - 14,561,942PRC BONDS - - - - 11,254 - 11,254ZERO COUPON - - - - 234,452 - 234,452REPURCHASE CONTRACTS WITH RELATED ENTITIES 4,718,530 - - - - - 4,718,530SHORT-TERM DEPOSITS 67,922,595 6,854,508 - - 78,682,683 - 153,459,786LCHR THIRD PARTIES - - - - 286,474 - 286,474MUTUAL FUNDS - 9 - - - - 9FORWARDS 2,773,386 - - - - - 2,773,386SWAPS 10,581,065 29,898 - - 108,977 - 10,719,940TOTAL 343,124,526 496,791,836 - - 411,563,063 - 1,251,479,425

GRAND TOTAL 1,222,860,877 2,420,871,387 81,652,765 - 1,990,864,206 657,803,624 6,374,052,859


173

Balance as of December 31, 2015

INSURANCE COMPANIES


ThCh$US DOLLAR

ThCh$EURO

ThCh$AIV(*)

ThCh$UF

ThCh$OThERThCh$

TOTALThCh$

FLOATING COMPANY BONDS - 17,323,758 - - - - 17,323,758 FOREIGN BANK BONDS - 61,335,876 - - 11,377,125 - 72,713,001 BANKS AND FINANCIAL INSTITUTIONS BONDS 2,517,236 - - - 16,522,649 - 19,039,885 BANKS AND FINANCIAL INSTITUTIONS BONDS (Single Investment Account)

- - - - 1,306,322 - 1,306,322

RECOGNITION BONDS 73,796,758 - - - - - 73,796,758 CORPORATE BONDS 6,798,655 24,852,096 - - 1,228,932,154 - 1,260,582,905 CORPORATE BONDS (Single Investment Account) - - - - 33,120,365 - 33,120,365 SECURITIZED BONDS - - - - 8,477,770 - 8,477,770 SECURITIZED BONDS (Single Investment Account) - - - - 8,535,730 - 8,535,730 SUBORDINATED BONDS - - - - 128,143,819 - 128,143,819 SUBORDINATED BONDS (Single Investment Account) - - - - 48,033,116 - 48,033,116 FOREIGN SUBORDINATED BONDS - 246,925,808 - - - - 246,925,808 LEASED HOUSING BONDS - - - - 873,919 - 873,919 NATIONAL BANK BONDS ISSUED ABROAD - 6,761,616 - - - - 6,761,616 ZERO COUPON UF - - - - 26,515,349 - 26,515,349 CORPORATE BONDS - 241,260,490 - - - - 241,260,490 DOLLAR SYNDICATED LOANS - 44,747,516 - - - - 44,747,516 SYNDICATED LOAN UF 12,170,149 - - - 100,089,119 - 112,259,268 SHORT-TERM DEPOSITS 7,121,291 - - - - - 7,121,291 SHORT-TERM DEPOSITS (Single Investment Account) 49,031 - - - - - 49,031 LONG-TERM DEPOSITS - - - - 1,089,878 - 1,089,878 LONG-TERM DEPOSITS IN UF - - - - 3,387,476 - 3,387,476 FOREIGN BANK DEPOSITS AND PROMISSORY NOTES - 27,628,542 - - - - 27,628,542 MORTGAGE BILLS - - - 606 18,291,040 - 18,291,646 MORTGAGE BILLS (Single Investment Account) - - - - 24,931,776 - 24,931,776 MUTUAL MORTGAGES - - - - 495,045,598 - 495,045,598 STRUCTURED NOTES WITH COUPON - - - - 93,943,017 - 93,943,017 CORPORATE PROMISSORY NOTES - - - - 136,129 - 136,129 NATIONAL YANKEE BONDS - 644,511,474 - - - - 644,511,474 TOTAL 102,453,120 1,315,347,176 - 606 2,248,752,351 - 3,666,553,253

FINANCIAL ASSETS AT FAIR VALUE BANKS AND FINANCIAL INSTITUTIONS BONDS 1,314,955 - - - 1,319,150 - 2,634,105 RECOGNITION BONDS 1,182,492 - - - - - 1,182,492 CORPORATE BONDS 1,287,589 - - - 13,641,500 - 14,929,089 SECURITIZED BONDS 2,907,405 - - - 646,135 - 3,553,540 SUBORDINATED BONDS - - - - 1,296,231 - 1,296,231 NATIONAL BANK BONDS ISSUED ABROAD - 702,094 - - - - 702,094 CORPORATE BONDS - 963,757 - - - - 963,757 MORTGAGE BILLS - - - - 4,381 - 4,381 NATIONAL YANKEE BONDS - 2,103,311 - - - - 2,103,311 SHARES IN PUBLIC COMPANIES 133,994,311 - - - - - 133,994,311 SHARES IN PRIVATE COMPANIES 1,737,246 - - - - - 1,737,246 SHARES IN FOREIGN COMPANIES - 31,753,066 - - - - 31,753,066 INVESTMENT FUNDS 90,138,246 154,557,236 15,189,766 - - - 259,885,248 INVESTMENT FUNDS (SINGLE INVESTMENT ACCOUNT) 1,213,267 - - - - - 1,213,267 MUTUAL FUNDS 9,872,119 - - - - - 9,872,119 FOREIGN MUTUAL FUNDS - 7,453,934 - - - - 7,453,934 MUTUAL FUNDS (VOLUNTARY PENSION SAVINGS) 305,878,416 76,393,685 - - - - 382,272,101 FORWARDS - 2,173,465 - - - - 2,173,465 TOTAL 549,526,046 276,100,548 15,189,766 - 16,907,397 - 857,723,757




ThCh$US DOLLAR

ThCh$EURO

ThCh$AIV(*)

ThCh$UF

ThCh$OThERThCh$

TOTALThCh$

NATIONAL YANKEE BONDS - - 1,198,730 - - - 1,198,730 TOTAL - - 1,198,730 - - - 1,198,730

FINANCIAL ASSETS AT FAIR VALUE SHARES IN PUBLIC COMPANIES 42,113,269 - - - - - 42,113,269 SHARES IN PRIVATE COMPANIES 138,381 - - - - - 138,381 SHARES IN FOREIGN COMPANIES - - 8,387,983 - - - 8,387,983 MUTUAL FUNDS 6,012,153 - - - - - 6,012,153 FORWARDS - 135,346 - - - - 135,346 TOTAL 48,263,803 135,346 8,387,983 - - - 56,787,132

174

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ThCh$US DOLLAR

ThCh$EURO

ThCh$AIV(*)

ThCh$UF

ThCh$OThERThCh$

TOTALThCh$

RECEIVABLE DOCUMENTS 30,679,371 28,562,252 863,427 - - 59,618 60,164,668TOTAL 30,679,371 28,562,252 863,427 - - 59,618 60.164.668

FINANCIAL ASSETS AT FAIR VALUESHARES IN PRIVATE COMPANIES 2,460,186 - - - - - 2,460,186CORPORATE BONDS 23,059,294 334,264,548 - - 179,487,329 - 536,811,171BANKS AND FINANCIAL INSTITUTIONS BONDS 26,795,834 - - - 75,257,355 - 102,053,189BCP BONDS 51,864,571 - - - 793,035 - 52,657,606BCU BONDS - - - - 15,436,778 - 15,436,778BTP BONDS 20,705,493 - - - - - 20,705,493BTU BONDS - - - - 4,146,180 - 4,146,180PRC BONDS - - - - 24,486 - 24,486ZERO COUPON - - - - 223,258 - 223,258SHORT-TERM DEPOSITS 36,553,285 - - - 65,573,774 - 102,127,059LCHR THIRD PARTIES - - - - 337,702 - 337,702MUTUAL FUNDS 30,246,246 27,649,347 - - - - 57,895,593FORWARDS 3,289,285 - - - - - 3,289,285SWAPS 7,264,439 - - - 280,329 - 7,544,768TOTAL 202,238,633 361,913,895 - - 341,560,226 - 905,712,754

GRAND TOTAL 933,160,973 1,982,059,217 25,639,906 606 2,607,219,974 59,618 5,548,140,294


B) INVESTMENTS AT FAIR VALUE ACCORDING TO hIERARChY As of December 31, 2016

LEVEL 1 LEVEL 2 LEVEL 3 TOTALNATIONAL INVESTMENTS 813,023,120 649,244,132 30,873,471 1,493,140,723

Fixed Income 338,945,558 544,158,125 30,873,471 913,977,154State instruments 182,773,701 174,531,168 - 357,304,869Financial system instruments 136,132,047 110,088,381 30,873,471 277,093,899Debt or loan instruments 20,039,810 259,538,576 - 279,578,386

Variable income 474,077,562 105,086,007 - 579,163,569Shares in public companies 70,464,778 - - 70,464,778Shares in private companies 2,459,798 10,854,903 - 13,314,701Investment funds 31,135,981 94,231,104 - 125,367,085Mutual funds 365,243,935 - - 365,243,935Others 4,773,070 - - 4,773,070

FOREIGN INVESTMENTS 204,754,968 643,650,608 - 848,405,576

Fixed Income 3,346,381 520,943,950 - 524,290,331Securities issued by states and foreign central banks - 477,119,635 - 477,119,635Securities issued by foreign banks and financial institutions 2,074,387 43,824,315 - 45,898,702Securities issued by foreign companies 1,271,994 - - 1,271,994

Variable income 201,408,587 122,706,658 - 324,115,245Shares in foreign companies 1,193,271 - - 1,193,271Foreign investment funds 118,990,381 122,706,658 - 241,697,039Foreign mutual funds 81,224,935 - - 81,224,935

DERIVATIVES - 13,493,326 - 13,493,326TOTAL 1,017,778,088 1,306,388,066 30,873,471 2,355,039,625

175


LEVEL 1 LEVEL 2 LEVEL 3 TOTALNATIONAL INVESTMENTS 768,427,973 398,976,375 - 1,167,404,348

Fixed Income 182,831,556 316,732,468 - 499,564,024State instruments 9,934,358 60,752,950 - 70,687,308Financial System Instruments 146,926,884 67,619,944 - 214,546,828Debt or loan instruments 25,970,314 188,359,574 - 214,329,888

Variable Income 585,596,417 82,243,907 - 667,840,324Shares in public companies 175,928,100 179,480 - 176,107,580Shares in private companies 2,598,566 1,737,247 - 4,335,813Investment funds 27,276,122 80,327,180 - 107,603,302Mutual funds 379,658,281 - - 379,658,281Others 135,348 - - 135,348

FOREIGN INVESTMENTS 238,666,530 401,145,249 - 639,811,779

Fixed Income 24,652,743 337,675,155 - 362,327,898Securities issued by states and foreign central banks - 337,675,155 - 337,675,155Securities issued by foreign banks and financial institutions 23,688,986 - - 23,688,986Securities issued by foreign companies 963,757 - - 963,757

Variable Income 214,013,787 63,470,094 - 277,483,881Shares in Foreign Companies 31,753,066 8,387,983 - 40,141,049Foreign investment funds 98,413,102 55,082,111 - 153,495,213Foreign Mutual Funds 83,847,619 - - 83,847,619

DERIVATIVES 2,173,463 10,834,053 - 13,007,516TOTAL 1,009,267,966 810,955,677 - 1,820,223,643

Level 1: Instruments traded in active markets, where the fair value is the observed price in those markets.

Level 2: Instruments traded in inactive markets, where the fair value is calculated using valuation techniques based on market information.

Level 3: The market valuation parameters are not observable through quoted prices or cannot be inferred directly from information in active markets. This valuation technique makes maximum use of available market information that includes recent arms-length transactions; using the fair value of another instrument that is substantially similar; discounted cash flow analysis; and option valuation models.

The fair value of assets not presented at that value in the Statement of Financial Position is derived from estimated cash flows, discounted using the relevant market interest rate for each transaction. In the case of investment securities held to maturity, fair value is based on market prices.

The fair value of liabilities without market prices is based on discounted cash flows using the interest rate that represents the liability, for similar maturity periods.

NOTE 12 - DEFERRED TAX ASSETS AND LIABILITIES

a) Consolidated deferred taxes as of December 31, 2016 and 2015 were as follows:

OPERATING SEGMENTS

TOTAL12-31-2016

ThCh$

TOTAL12-31-2015

ThCh$ASSETS LIABILITIES ASSETS LIABILITIES

Parent company and others 965,458 1,062,237 820,719 513,833Insurance 37,586,069 44,075,284 35,878,279 37,334,718Bank and subsidiaries 28,664,228 12,915,610 35,264,696 10,944,840TOTAL 67,215,755 58,053,131 71,963,694 48,793,391

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b) Deferred tax by operating segments

PARENT COMPANY AND OThERSCONSORCIO FINANCIERO

CONSORCIO INV. SPA

CONSORCIO SERVICIOS PUNTA PITE LOTE 18

PRESIDENTE RIESCO

INVERSIONES CONT. BIO BIO

TOTAL SEGMENT

DEFERRED TAX ASSETS PROVISIONS 395,396 - 5,181 - 400,577 Tax losses - 2,198 - 104,132 86,087 - 86,087 192,417Others 151,881 - - - 1 220,582 1 372,464TOTAL ASSETS 547,277 2,198 5,181 104,132 86,088 220,582 86,088 965,458

Deferred tax liabilities Prepaid expenses 116,101 - - - - - 116,101Foreign investment 946,136 - - - - - - 946,136TOTAL LIABILITIES 1,062,237 - - - - - - 1,062,237

INSURANCEBANK AND

SUBSIDIARIESCONSORCIO

VIDA CN LIFECONSORCIO GENERALES

TOTAL SEGMENT CONSORCIO

DEFERRED TAX ASSETS Financial instruments valuation 17,411,437 16,009,636 3,514 33,424,587 4,627,275Lease agreements - 138,049 - 138,049 14,308,246Provisions 1,930,138 86,948 58,369 2,075,455 8,806,822Loans - - - - 147,066Tax losses - - - - 707,402Others 1,268,805 49,319 629,854 1,947,978 67,417TOTAL ASSETS 20,610,380 16,283,952 691,737 37,586,069 28,664,228

Deferred tax liabilities Financial instruments valuation 3,992,841 12,124,210 680 16,117,731 2,417,468 Intangible assets 309,317 - - 309,317 - Lease agreements 11,891,362 - - 11,891,362 10,370,503 Prepaid expenses 183,561 - - 183,561 - Others 106,132 112,735 - 218,867 127,639 TOTAL LIABILITIES 31,822,824 12,236,945 15,515 44,075,284 12,915,610


b) Deferred tax by operating segments

MATRIZ Y OTRAS CONSORCIO FINANCIERO

CONSORCIO INV. SPA

CONSORCIO SERVICIOS PUNTA PITE LOTE 18

PRESIDENTE RIESCO

TOTAL SEGMENTO

DEFERRED TAX ASSETS Financial instruments valuation 250,372 - - - - - 250,372Provisions 287,444 - 3,071 - - - 290,515Tax losses - 1,076 - 94,908 - - 95,984Others - - - - 14,229 169,619 183,848TOTAL ASSETS 537,816 1,076 3,071 94,908 14,229 169,619 820,719

DEFERRED TAX LIABILITIES Prepaid expenses 157,435 - - - - 157,435Foreign investment 356,398 - - - - - 356,398TOTAL LIABILITIES 513,833 - - - - - 513,833

INSURANCEBANK AND

SUBSIDIARIESCONSORCIO

VIDA CN LIFECONSORCIO GENERALES

TOTAL SEGMENT CONSORCIO

DEFERRED TAX ASSETS Financial instruments valuation 23,230,205 9,180,248 36,803 32,447,256 15,653,350 Lease agreements - 7,652 - 7,652 12,283,468 Provisions 1,530,423 81,229 101,534 1,713,186 6,566,697 Loans - - - - 119,983 Tax losses - - - - 569,711 Others 978,043 47,674 684,468 1,710,185 71,487 TOTAL ASSETS 25,738,671 9,316,803 822,805 35,878,279 35,264,696

DEFERRED TAX LIABILITIES Depreciation 13,410,503 - 19,621 13,430,124 - Financial instruments valuation 7,403,746 5,777,154 - 13,180,900 1,654,914 Intangible assets 192,466 - - 192,466 - Lease Agreements 8,903,208 1,301,498 - 10,204,706 9,170,035 Provisions - - - - - Prepaid expenses 107,284 - 1,340 108,624 - Others 104,726 112,492 680 217,898 119,891 TOTAL LIABILITIES 30,121,933 7,191,144 21,641 37,334,718 10,944,840

The accumulated temporary differences in equity were ThCh$ 9,632,096 as of December 31, 2016 (ThCh$ 10,904,576 as of December 31, 2015).

177

c) Income tax expense

INCOME TAX EXPENSE12-31-2016

ThCh$12-31-2015

ThCh$INCOME TAX EXPENSE Current year tax (28,087,168) (24,313,429)

Credit (charge) for deferred taxes: Creation and reversal of temporary differences (3,640,421) 9,039,552 Change in unreconciled temporary differences 968,540 2,204,282 Reconciliation of previously unreconciled tax loss 865,380 -SUBTOTALS (29,893,669) (13,069,595)

Tax on disallowable expenditure - Article 21 (33,080) (83,427) Others (253,199) (893,818) NET ChARGE TO INCOME FOR INCOME TAX (30,179,948) (14,046,840)

RECONCILIATION OF EFFECTIVE TAX RATE

12-31-2016 12-31-2015TAX RATE

% ThCh$ TAX RATE

% ThCh$ Corporate income tax 24.0% (40,161,936) 22.5% (23,003,005) Permanent differences (6.49%) 10,866,697 (5.91%) 6,044,950 Additions and deductions 2.34% (3,917,976) (0.77%) 782,215 Tax on disallowable expenditure (1.70%) 2,838,269 (0.01%) 7,516 Others (0.12%) 194,998 (2.08%) 2,121,484EFFECTIVE RATE AND EXPENSE FOR INCOME TAXES 18.03% (30,179,948) 13.73% (14,046,840)

NOTE 13 – INVESTMENTS ACCOUNTED FOR USING ThE EQUITY METhOD

Associated companies as of December 31, 2016 and 2015 were as follows:


OWNERShIP INTEREST

% EQUITY NET INCOME IMPAIRMENTINVESTMENT

INCOME

FINAL INVESTMENT VALUE (PV)

76.069.369-3 LVCC Asset Management S.A. Chile 25.00% 12,173,768 5,018,842 - 1,254,712 3,043,442 99.531.100-3 Inmobiliaria Seis Norte S.A. Chile 50.00% 1,475,002 50,357 - 25,180 737,500 Extranjera La Positiva Vida1 Perú 40.14% 79,996,530 5,636,769 - 2,190,541 41,242,085 99.556.340-1 Inmobiliaria Alsacia Golf S.A. Chile 0.10% 3,280 - - - 328 96.658.670-2 Dcv-Vida Chile 21.14% 1,038,298 210,328 - 43,845 219,564 76.515.769-2 Inversiones El Pinar SpA Chile 50.00% 4,974,602 (350,558) - (143,997) 2,487,301 99.564.930-6 Inmobiliaria Urano S.A. Chile 33.33% 2,907 - - - 969 76.409.386-0 Avsa Ñuñoa Hc SpA Chile 40.00% 754,375 (185,567) - (74,227) 301,750 99.586.380-4 Constructora E Inmb. Del Parque S.A Chile 50.00% 66,217 (26,474) - (13,777) 33,109 99.564.920-9 Constructora E Inmb. Edificio Tres S.A. Chile 33.33% (3,643) 1,047 - - 1 76.745.890-8 Constructora E Inmobiliaria Del Parque 2 S.A. Chile 50.00% 221,414 (8,054) - (4,027) 110,707 76.587.886-1 Desarrollos Industriales SpA Chile 40.00% 1,815,525 (9,918) - (3,967) 726,210 76.954.790-8 Inmobiliaria Los Cóndores (***) Chile 33.33% 11,811,079 (150,934) - (50,029) 3,937,026 99.591.340-2 Inmobiliaria Los Navegantes S.A. Chile 50.00% 17,898 11,971 - 5,985 8,949 76.455.471-k Inmobiliaria Aguapiedra SpA. Chile 15.00% 6,193,894 (36,006) - (5,401) 929,084 76.318.228-2 Inmobiliaria Aguas Claras Chile 15.00% 9,244,179 798,820 - 119,823 1,386,627 99.599.540-9 Inmobiliaria Alta Vista S.A. Chile 40.00% 1,108,646 155,699 - 76,155 443,458 76.468.394-3 Inmobiliaria Alto Reloncaví Chile 45.00% 628,024 (302,112) - (125,725) 282,611 76.233.018-0 Inmobiliaria Armas Move S.A. Chile 50.00% 399,101 2,597,732 - 1,298,866 199,551 76.231.874-1 Inmobiliaria Calama SpA. Chile 40.00% 3,793,413 147,882 - 59,153 1,517,365 76.563.450-4 Inmobiliaria Desarrollo Sur S.A. Chile 35.00% - - - 797 1 76.326.533-1 Inmobiliaria Edificios De Hacienda SpA. Chile 15.00% 3,389,118 143,688 - 21,532 508,368 76.009.849-3 Inmobiliaria El Montijo 2 S.A. Chile 33.33% 660,667 17,713 - 5,905 220,222 76.646.780-6 Inmobiliaria El Montijo S.A. Chile 33.33% 5,054,582 1,700,943 - 559,593 1,684,861 96.995.870-8 Inmobiliaria Ipl S.A. Chile 33.33% 75,878 (396) - (132) 25,293 76.641.360-9 Inmobiliaria Jardín Del Carmen S.A. Chile 33.33% 93,826 6,015 - 2,005 31,275 76.027.704-5 Inmobiliaria Jardines De Cerrillos Chile 50.00% 6,603,574 (634,988) - (317,494) 3,301,787 99.591.360-7 Inmobiliaria La Hacienda De Huechuraba S.A. Chile 50.00% 917,826 (77,084) - (38,542) 458,913 76.283.072-8 Inmobiliaria Las Higueras S.A. Chile 50.00% (1,155,485) (418,691) - - 1 76.349.920-0 Inmobiliaria Los Aromos S.A. Chile 50.00% 633,861 (69,538) - (34,769) 316,931 99.577.930-7 Inmobiliaria Los Arrayanes S.A Chile 44.00% 276,348 37,929 - 16,689 121,593 76.883.240-4 Inmobiliaria Los Cipreses (**) Chile 50.00% 9,181,991 32,143 - 16,071 4,590,996 99.591.350-k Inmobiliaria Los Gavilanes S.A. Chile 50.00% 195,078 (6,838) - (3,419) 97,539 76.216.575-9 Inmobiliaria Los Maderos SpA. Chile 15.00% 1,447,730 479,431 - 71,915 217,160 76.455.482-5 Inmobiliaria Los Robles SpA. Chile 15.00% 6,321,901 124,730 - 18,710 948,285 76.416.293-5 Inmobiliaria Monte Santo 3 SpA. Chile 33.33% 135,147 246,494 - 45,049 45,049 76.213.015-7 Inmobiliaria Montepiedra S.A. Chile 15.00% 2,877,948 2,363,456 - 354,518 431,692 96.931.030-9 Inmobiliaria Parque La Luz Chile 33.33% (89,685) (45) - - 1 76.435.779-5 Inmobiliaria Pc 50 SpA Chile 50.00% 4,926,692 18,640 - 9,320 2,463,346 99.591.150-7 Inmobiliaria San Luis S.A. Chile 25.00% 121,757 - - - 30,439 76.209.105-4 Inmobiliaria San Nicolás Norte Chile 40.00% 492,901 233,602 - 93,441 197,160 76.320.132-5 Inmobiliaria San Nicolás Norte Dos Chile 40.08% 2,565,880 14,642 - 5,869 1,028,376 96.953.540-8 Inmobiliaria Sol De Maipú S.A. Chile 50.00% 522,243 597,916 - 261,121 261,122 76.966.850-0 Inmobiliaria Vicente Valdes Chile 35.00% 1,709,832 2,015,267 - 705,586 598,441 76.320.057-4 Inmobiliaria Y Desarrolladora El Remanso Chile 30.00% 7,559,915 (333,587) - (100,076) 2,267,975 96.844.470-0 Piedra Roja Desarrollos Inmobiliarios S.A. (*) Chile 15.83% 89,217,197 (1,381,141) - (218,631) 14,121,556 76.039.786-5 Soc. Inv. Inmb. Seguras Chile 42.06% 2,947,855 (1,008,874) - (413,466) 1,239,788 76.449.357-5 Matriz Plaza Egaña SpA. Chile 2.30% 52,694 (163,305) - - 1,205

TOTAL 282,451,780 17,497,946 - 5,714,702 92,817,012

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BUSINESS COMBINATIONConsorcio Financiero S.A. has acquired an investment through its subsidiary CF Inversiones Peru SAC that qualifies as a business combination and the corresponding IFRS apply.

Consorcio Financiero S.A. was formally notified on December 16, 2015 that the Peruvian Superintendence of Banking, Insurance and Pensions had authorized its Peruvian subsidiary, CF Inversiones Perú Sociedad Anónima Cerrada, to acquire 40.14% of the shares of La Positiva Vida Seguros y Reaseguros S.A. (“La Positiva Vida”).

Therefore, as of that date Consorcio Financiero S.A. owned 40.14% of the shares of La Positiva Vida Seguros y Reaseguros S.A. through its subsidiary CF Inversiones Perú S.A.C.

Movements during the year ended December 31, 2016 were as follows: The fair value of assets and liabilities has been determined on a provisional basis and may change over the coming year.

ITEM ThCh$Value 34,737,490Minority interests 51,794,844TOTAL TO DISTRIBUTE 86,532,334

Net asset value as of 12-31-2015 40.14% 63,534,643

FAIR VALUE OF ASSETS AND LIABILITIES AS OF 12-31-2015

Investments in property 11,600,471Net financial investments (17,229,401)Deferred tax liabilities (adjustments to fair value) 1,671,792

Customer relationships 1,391,536Trademarks 5,481,468Deferred tax liabilities (intangibles) (2,048,150)

TOTAL NET ASSETS AT FAIR VALUE 867,716

GOODWILL 22,129,975

179

As of December 31, 2015:


OWNERShIP INTEREST

% EQUITY NET INCOME IMPAIRMENTINVESTMENT

INCOME

FINAL INVESTMENT VALUE (PV)

76.069.369-3 LVCC Asset Management S.A. Chile 25.00% 11,057,652 4,278,202 - 1,069,551 2,764,413 99.531.100-3 Inmobiliaria Seis Norte S.A. Chile 50.00% 1,424,645 (24,516) - (12,258) 712,323 Extranjera La Positiva Vida Perú 40.14% 66,258,147 4,388,382 - - 36,226,562 96.658.670-2 Dcv-Vida Chile 21.14% 881,377 230,077 - 47,582 186,381 76.515.769-2 Inversiones El Pinar SpA Chile 50.00% 1,001,377 (55,040) - (19,815) 636,956 99.564.930-6 Inmobiliaria Urano S.A. Chile 33.33% 2,907 - - - 968 76.409.386-0 Avsa Ñuñoa Hc SpA Chile 40.00% 939,942 (214,455) - (85,782) 375,977 99.586.380-4 Constructora E Inmb. Del Parque S.A Chile 50.00% 93,771 (9,932) - 14,716 46,886 99.564.920-9 Constructora E Inmb. Edificio Tres S.A. Chile 33.33% (4,690) 1,222 - - 1 76.210.019-3 Constructora E Inmobiliaria Alonso De Cordova S.A. Chile 33.33% (932,438) (545,523) - - 1 76.745.890-8 Constructora E Inmobiliaria Del Parque 2 Sa. Chile 50.00% 229,467 (6,455) - (3,228) 114,734 76.954.790-8 Inmobiliaria Los Condores Chile 33.33% 11,788,350 576,061 - 319,969 3,929,450 99.591.340-2 Inmobiliaria Los Navegantes S.A. Chile 50.00% 5,928 (13,891) - (6,946) 2,964 76.455.471-k Inmobiliaria Aguapiedra SpA. Chile 15.00% 4,132,217 (295,045) - (44,262) 619,833 76.318.228-2 Inmobiliaria Aguas Claras Chile 15.00% 9,955,765 1,264,553 - 189,714 1,493,365 99.599.540-9 Inmobiliaria Alta Vista S.A. Chile 40.00% 918,259 275,617 - 171,783 367,304 76.468.394-3 Inmobiliaria Alto Reloncaví Chile 45.00% 907,413 (84,161) - (37,872) 408,336 76.233.018-0 Inmobiliaria Armas Move S.A. Chile 50.00% 61,369 72,915 - 30,684 30,685 76.231.874-1 Inmobiliaria Calama Chile 40.00% 3,645,531 19,263 - 7,705 1,458,212 76.563.450-4 Inmobiliaria Desarrollo Sur S.A. Chile 35.00% 178,727 78,743 - 53,146 62,554 76.326.533-1 Inmobiliaria Edificios De Hacienda SpA. Chile 15.00% 1,716,346 12,787 - 1,918 257,452 76.009.849-3 Inmobiliaria El Montijo 2 S.A. Chile 33.33% 1,854,106 23,520 - 10,544 618,035 76.646.780-6 Inmobiliaria El Montijo S.A. Chile 33.33% 11,656,582 5,264,160 - 1,747,803 3,885,527 96.995.870-8 Inmobiliaria Ipl S.A. Chile 33.33% 76,274 (871) - (290) 25,425 76.641.360-9 Inmobiliaria Jardin Del Carmen S.A. Chile 33.33% 87,812 82,238 - 27,412 29,271 76.027.704-5 Inmobiliaria Jardines De Cerrillos Chile 50.00% 7,238,562 (587,491) - (293,746) 3,619,281 99.591.360-7 Inmobiliaria La Hacienda De Huechuraba S.A. Chile 50.00% 994,910 437,339 - 218,670 497,455 76.283.072-8 Inmobiliaria Las Higueras S.A. Chile 50.00% (1,162,839) (383,439) - - 1 76.349.920-0 Inmobiliaria Los Aromos S.A. Chile 50.00% 1,603,399 387,172 - 193,586 801,700 99.577.930-7 Inmobiliaria Los Arrayanes S.A Chile 44.00% 238,419 198,440 - 87,314 104,904 76.883.240-4 Inmobiliaria Los Cipreses Chile 50.00% 9,149,848 686,966 - 343,483 4,574,924 99.591.350-k Inmobiliaria Los Gavilanes S.A. Chile 50.00% 201,916 116,389 - 58,195 100,958 76.216.575-9 Inmobiliaria Los Maderos SpA. Chile 15.00% 5,090,951 3,363,075 - 504,461 763,643 76.455.482-5 Inmobiliaria Los Robles SpA. Chile 15.00% 4,149,708 (229,114) - (34,378) 622,456 76.416.293-5 Inmobiliaria Monte Santo 3 SpA. Chile 33.33% (111,347) (125,403) - (3,000) 1 76.213.015-7 Inmobiliaria Montepiedra S.A. Chile 15.00% 6,712,129 2,479,378 - 371,906 1,006,819 96.931.030-9 Inmobiliaria Parque La Luz Chile 33.33% (89,640) (564) - - 1 76.435.779-5 Inmobiliaria Pc 50 SpA Chile 50.00% 4,408,053 108,053 - 54,026 2,204,026 99.591.150-7 Inmobiliaria San Luis S.A. Chile 25.00% 121,757 2,159 - - 30,439 76.209.105-4 Inmobiliaria San Nicolas Norte Chile 40.00% 3,612,771 1,852,421 - 740,968 1,445,108 76.320.132-5 Inmobiliaria San Nicolas Norte Dos Chile 40.08% 2,551,238 7,224 - 6,107 1,022,507 96.953.540-8 Inmobiliaria Sol De Maipu S.A. Chile 50.00% (75,673) 657,369 - - 1 76.966.850-0 Inmobiliaria Vicente Valdes Chile 35.00% 1,785,906 (478,149) - (167,352) 625,067 76.320.057-4 Inmobiliaria Y Desarrolladora El Remanso Chile 30.00% 8,097,664 (76,189) - (84,105) 2,368,051 96.844.470-0 Piedra Roja Desarrollos Inmobiliarios S.A. Chile 15.39% 112,644,552 6,563,460 - 1,038,884 17,829,706 76.039.786-5 Soc. Inv. Inmb. Seguras Chile 42.06% 4,631,948 (1,326,837) - (823,805) 1,663,656

TOTAL 299,731,068 28,970,110 - 5,693,288 93,534,319

The presumption that the Company does not exercise significant influence over companies in which it holds less than 20% has been disregarded, as the Company is represented on the board of Directors and thus has sufficient authority to exercise significant influence.

(*) The unaudited financial statements for Piedra Roja Desarrollos Inmobiliarios S.A. as of December 31, 2016 are as follows:

STATEMENT OF FINANCIAL POSITION AS OF 12-31-2016ThCh$ LIABILITIES ThCh$ASSETS

Current Assets 19,030,347 Current Liabilities 13,632,064 Non-Current Assets 162,715,054 Non-Current Liabilities 78,896,140

Equity 89,217,197

TOTAL ASSETS 181,745,401 TOTAL LIABILITIES 181,745,401

STATEMENT OF NET INCOME ThCh$Revenue from ordinary activities 9,530,906 Cost of sales (9,080,903) GROSS INCOME 450,003

Administrative expenses (2,033,199) Financial income 114,667 Financial costs (1,051,052) Other income (losses) 462,939 NET LOSS BEFORE TAX (2,056,642) Income from taxation 675,501

NET LOSS FOR ThE YEAR (1,381,141)

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(**) The unaudited financial statements for Inmobiliaria Los Cipreses S.A. as of December 31, 2016 are as follows:


Current Assets 8,101,773 Current Liabilities 4,618,198 Non-Current Assets 15,699,749 Non-Current Liabilities 10,001,333

Equity 9,181,991 TOTAL ASSETS 23,801,522 TOTAL LIABILITIES 23,801,522

STATEMENT OF NET INCOME ThCh$Revenue from ordinary activities 2,835,246Cost of sales (2,081,604)GROSS PROFIT 753,642

Administrative expenses (459,784)Financial costs (106,606)Other income (losses) (147,363)NET INCOME BEFORE TAX 39,889Income tax expense (7,746)

NET INCOME FOR ThE YEAR 32,143

(**) The unaudited financial statements for Inmobiliaria Los Condores S.A. as of December 31, 2016 are as follows:


Current Assets 5,223,023 Current Liabilities 9,193,546 Non-Current Assets 15,781,602 Equity 11,811,079

TOTAL ASSETS 21,004,625 TOTAL LIABILITIES 21,004,625

STATEMENT OF NET INCOME ThCh$Revenue from ordinary activities 8,710,456Cost of sales (7,266,769)GROSS PROFIT 1,443,687

Administrative expenses (1,480,017)Financial income 9,148Financial costs (264,995)Other income (losses) (13,345)NET LOSS BEFORE TAX (305,522)Income from taxation 154,588

NET LOSS FOR ThE YEAR (150,934)

NOTE 14 - INTANGIBLE ASSETS OThER ThAN GOODWILL

a) Intangible assets other than goodwill were as follows:

12/31/2016ThCh$

OPENING BALANCEMOVEMENTS FOR

ThE YEARAMORTIZATION FOR

ThE YEAR CLOSING BALANCEAMORTIZATION

PERIOD (MONThS)Computer Programs 880,781 730,772 (321,035) 1,290,518 120Computer Programs 1,107,677 612,020 (389,811) 1,329,886 60Computer Programs 140,464 71,647 (3,142) 208,969 48Rights 1,729,237 454,415 (882,981) 1,300,671 60TOTAL 3,858,159 1,868,854 (1,596,969) 4,130,044

12/31/2015ThCh$

OPENING BALANCEMOVEMENTS FOR

ThE YEARAMORTIZATION FOR

ThE YEAR CLOSING BALANCEAMORTIZATION

PERIOD (MONThS)Computer Programs 341,341 672,590 (133,150) 880,781 120Computer Programs 1,075,785 404,184 (372,292) 1,107,677 60Computer Programs 484,353 (343,889) - 140,464 48Rights 2,650,424 - (921,187) 1,729,237 60TOTAL 4,551,903 732,885 (1,426,629) 3,858,159

b) Amortization of Intangible Assets is calculated using the straight-line method, amortization is distributed throughout the estimated useful life of the asset.

181

NOTE 15 – GOODWILL

a) Goodwill was as follows:


INVESTMENT ThAT GENERATED ThE GOODWILL

ThCh$

NET OPENING BALANCE

ACQUISITIONS ThROUGh ShARES

IMPAIRMENT LOSSES RECOGNIZED IN

EQUITY


NET INCOMENET CLOSING

BALANCEBanco Consorcio 1,777,258 - - - 1,777,258CN Life Compañía de Seguros S.A. 4,677,279 - - - 4,677,279Cía. de Seguros de Vida Consorcio Nacional de Seguros S.A. - 59,722 - - 59,722Inmobiliaria Seis Norte S.A. 72,788 - - - 72,788Piedra Roja Desarrollos Inmobiliarios S.A. 455,857 - - - 455,857Inversiones el Pinar SpA 396,995 72,774 - - 469,769Inversiones Continental Bio Bio SpA - 410,207 - - 410,207TOTAL 7,380,177 542,703 - - 7,922,880


INVESTMENT ThAT GENERATED ThE GOODWILL

ThCh$

NET OPENING BALANCE

ACQUISITIONS ThROUGh ShARES


EQUITY


NET INCOMENET CLOSING

BALANCEBanco Consorcio 1,777,256 2 - - 1,777,258CN Life Compañía de Seguros S.A. 4,677,279 - - - 4,677,279Inmobiliaria Seis Norte S.A. 72,788 - - - 72,788Piedra Roja Desarrollos Inmobiliarios S.A. 455,857 - - - 455,857Inversiones el Pinar SpA - 396,995 - - 396,995TOTAL 6,983,180 396,997 - - 7,380,177

The impairment model is described in Note 3.1.9 - Accounting Policies.

NOTE 16 – PROPERTY INVESTMENTS

a) Property Investments were as follows:

NET PROPERTY INVESTMENTS12-31-2016

ThCh$12-31-2015

ThCh$Land 270,755,527 238,752,949Buildings 151,434,043 132,142,133TOTAL 422,189,570 370,895,082

GROSS PROPERTY INVESTMENTS12-31-2016

ThCh$12-31-2015

ThCh$Land 270,755,527 238,752,949 Buildings 181,132,996 157,595,266 TOTAL 451,888,523 396,348,215

ACCUMULATED DEPRECIATION AND IMPAIRMENT ON PROPERTY INVESTMENTS12-31-2016

ThCh$12-31-2015

ThCh$Accumulated depreciation and impairment, buildings 29,698,953 25,453,133 TOTAL 29,698,953 25,453,133

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b) Detail of movements


LANDThCh$

BUILDINGSThCh$

TOTALThCh$

PROPERTY INVESTMENTS OPENING BALANCE 238,752,949 132,142,133 370,895,082 Additions 40,175,142 22,220,443 62,395,585Depreciation expense, property, plant and equipment - (3,539,170) (3,539,170)Sales and disposals (15,161,110) (95,535) (15,256,645)Revaluation adjustments 7,000,156 449,502 7,449,658Impairment provision (11,610) 256,670 245,060CLOSING BALANCE 270,755,527 151,434,043 422,189,570


LANDThCh$

BUILDINGSThCh$

TOTALThCh$

PROPERTY INVESTMENTS OPENING BALANCE 236,921,960 114,777,431 351,699,391 Additions 17,441,088 15,233,737 32,674,825Depreciation expense - (2,862,208) (2,862,208)Sales and disposals (24,370,591) 4,983,259 (19,387,332)Revaluation adjustments 8,760,492 116,216 8,876,708Impairment provision - (106,302) (106,302)CLOSING BALANCE 238,752,949 132,142,133 370,895,082

See “Contingencies and Commitments” (Note 34), which details restrictions associated with property investments.

NOTE 17 - PROPERTY, PLANT AND EQUIPMENT

a) Property, plant and equipment were as follows:

NET PROPERTY, PLANT AND EQUIPMENT12-31-2016

ThCh$12-31-2015

ThCh$Construction in progress, net - 1,507,400Land 4,746,497 5,056,915Buildings, net 16,854,404 16,798,491Furniture, plant and equipment, net 1,939,393 1,845,072Computer equipment, net 1,989,433 1,805,406Vehicles, net 137,520 264,951Others, net 1,908,023 2,064,799TOTAL, NET 27,575,270 29,343,034

GROSS PROPERTY, PLANT AND EQUIPMENT12-31-2016

ThCh$12-31-2015

ThCh$Construction in progress, gross - 1,507,400Land 4,746,497 5,056,915Buildings, gross 23,751,245 23,098,914Furniture, plant and equipment, gross 5,645,925 5,306,174Computer equipment, gross 13,527,237 12,397,661Vehicles, gross 211,923 443,493Others, gross 3,815,339 3,616,146TOTAL, GROSS 51,698,166 51,426,703

ACCUMULATED DEPRECIATION AND IMPAIRMENT ON PROPERTY, PLANT AND EQUIPMENT12-31-2016

ThCh$12-31-2015

ThCh$Accumulated depreciation and impairment, buildings 6,896,841 6,300,423Accumulated depreciation and impairment, furniture, plant and equipment 3,706,532 3,461,102Accumulated depreciation and impairment, computer equipment 11,537,804 10,592,255Accumulated depreciation and impairment, vehicles 74,403 178,542Accumulated depreciation and impairment, other 1,907,316 1,551,347TOTAL ACCUMULATED DEPRECIATION AND IMPAIRMENT 24,122,896 22,083,669

183

b) Detail of movements


CONSTRUCTION IN PROGRESS

ThCh$LAND

ThCh$BUILDINGS

ThCh$

FURNITURE, PLANT AND EQUIPMENT

ThCh$

COMPUTER EQUIPMENT

ThCh$VEhICLES

ThCh$OThERSThCh$

TOTAL12-31-2016

ThCh$Property, plant and equipment, opening balance

1,507,400 5,056,915 16,798,491 1,845,072 1,805,406 264,951 2,064,799 29,343,034

Additions 1,472,324 - 3,048,348 351,463 1,140,365 99,656 201,718 6,313,874Depreciation expense - - (434,897) (257,142) (956,096) (32,031) (358,494) (2,038,660)Sales and disposals (3,048,348) (431,505) (2,932,845) - (242) (195,056) - (6,607,996)Revaluation adjustments 68,624 121,816 375,307 - - - - 565,747Impairment provision - (729) - - - - - (729)CLOSING BALANCE - 4,746,497 16,854,404 1,939,393 1,989,433 137,520 1,908,023 27,575,270


CONSTRUCTION IN PROGRESS

ThCh$LAND

ThCh$BUILDINGS

ThCh$

FURNITURE, PLANT AND EQUIPMENT

ThCh$

COMPUTER EQUIPMENT

ThCh$VEhICLES

ThCh$OThERSThCh$

TOTAL12-31-2015

ThCh$Property, plant and equipment, opening balance

533,390 4,899,243 16,734,973 1,628,247 1,531,945 352,504 2,448,291 28,128,593

Additions 943,355 - - 594,635 1,127,112 57,897 23,150 2,746,149Depreciation expense - - (422,051) (266,532) (853,651) (57,574) (406,642) (2,006,450)Sales and disposals - - - (111,278) - (87,876) - (199,154)Revaluation adjustments 30,655 157,672 496,862 - - - - 685,189Impairment provision - - (11,293) - - - - (11,293)CLOSING BALANCE 1,507,400 5,056,915 16,798,491 1,845,072 1,805,406 264,951 2,064,799 29,343,034

Estimated useful lives as of December 31, 2016 and 2015 were as follows:

DESCRIPTION

ASSIGNED USEFUL LIFE (YEARS)

CONSOLIDATED INFORMATION

Buildings 50 to 51Furniture, plant and equipment 4 to 7Computer equipment 2 to 3Vehicles 3Others 4

Property, plant and equipment do not present ownership restrictions and they are not pledged as security for liabilities.

There are no assets that are temporarily out of service, nor are there significant assets that are in use but are fully depreciated.

NOTE 18 – CURRENT TAX LIABILITIES

Current tax liabilities were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

VAT payable 730,841 746,115Income tax 5,956,234 5,193,892Third-party tax 1,020,180 1,229,562Reinsurance tax 42,976 58,701Other taxes 672,243 344,348TOTAL 8,422,474 7,572,618

184

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AP.


NOTE 19 - OThER NON-FINANCIAL LIABILITIES

Other non-financial liabilities were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

INSURANCEDividends payable 106,059 127,984Insurance contributions payable 4,019,400 3,245,690Expired checks 3,048,067 2,448,196Accounts payable 10,690,164 11,096,518Prepayments on projects (*) 33,772,835 31,036,931Brokerage payables 1,643,707 1,430,325Premium prepayments received 1,506 1,723Payables to staff 255,831 401,045Other non-financial liabilities 544,138 714,594

BANK AND SUBSIDIARIESAccounts payable 22,155,208 32,768,165

PARENT COMPANY AND OThERSExpired checks 134,258 130,931Accounts payable 3,242,011 2,987,651Payables to staff 13,215 10,545Other non-financial liabilities 4,332 1,021TOTAL 79,630,731 86,401,319

(*) Prepayments on real estate investment commitments in the insurance segment.

NOTE 20 - TRADE AND OThER PAYABLES

Trade and other payables were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

Technical reserves 5,228,090,782 4,658,963,006Payables on insurance transactions 9,480,118 8,057,969Brokerage creditors 20,299,189 14,449,468TOTAL 5,257,870,089 4,681,470,443

The calculation model for technical reserves is described in Note 3.3.6 - Accounting Policies.

185

NOTE 21 - OThER FINANCIAL LIABILITIES


a) Other financial liabilities, applicable to the Insurance, Parent Company and others segment

FAIR VALUEThCh$

AMORTIZED COSTThCh$

TOTAL12-31-2016

ThCh$Bank obligations 1,205,539 186,723,807 187,929,346Bonds payable - 132,125,257 132,125,257Derivative obligations 788,023 50,895,974 51,683,997Repurchase agreements - 3,000,659 3,000,659TOTAL 1,993,562 372,745,697 374,739,259

b) Other financial liabilities, applicable to the Bank and its subsidiaries segment

FAIR VALUEThCh$

AMORTIZED COSTThCh$

TOTAL12-31-2016

ThCh$Bank obligations - 176,074,080 176,074,080Current accounts - 15,379,260 15,379,260Current bonds - 455,387,741 455,387,741Derivative obligations 10,208,982 - 10,208,982Other obligations - 3,877,457 3,877,457Repurchase contracts and securities lending 323,802,928 - 323,802,928Savings accounts and time deposits. - 1,791,144,349 1,791,144,349Payables to credit card operators - 2,953 2,953TOTAL 334,011,910 2,441,865,840 2,775,877,750

GRAND TOTAL 336,005,472 2,814,611,537 3,150,617,009


a) Other financial liabilities applicable to the Insurance, Parent Company and others segment

FAIR VALUEThCh$

AMORTIZED COSTThCh$

TOTAL12-31-2015

ThCh$Bank obligations 1,173,761 226,186,973 227,360,734Bonds payable - 128,390,957 128,390,957Derivative obligations 1,761,480 82,502,991 84,264,471Repurchase agreements - 53,279,809 53,279,809TOTAL 2,935,241 490,360,730 493,295,971

b) Other financial liabilities, applicable to the bank and its subsidiaries segment

FAIR VALUEThCh$

AMORTIZED COSTThCh$

TOTAL12-31-2015

ThCh$Bank obligations - 123,469,859 123,469,859Current accounts - 3,556,282 3,556,282Current bonds - 312,910,920 312,910,920Derivative obligations 17,715,068 - 17,715,068Other obligations - 45,257,523 45,257,523Repurchase contracts and securities lending 234,176,356 - 234,176,356Savings accounts and time deposits. - 1,611,247,937 1,611,247,937Payables to credit card operators - 16,511 16,511TOTAL 251,891,424 2,096,459,032 2,348,350,456

GRAND TOTAL 254,826,665 2,586,819,762 2,841,646,427

186

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AP.


Obligations as of December 31, 2016: (Insurance, Parent Company and Others)

DEBTOR ID

NUMBER DEBTOR

NAME DEBTOR

COUNTRYCREDITOR ID

NUMBERCREDITOR

NAMECREDITOR COUNTRY CURRENCY

REPAYMENT TERMS

EFFECTIVE RATE %

NOMINAL RATE %

0 - 90 DAYS

ThCh$

91 DAYS - 1 YEARThCh$

1 - 3 YEARSThCh$

3 - 5 YEARSThCh$

OVER 5 YEARSThCh$

TOTALThCh$

79.619.200-3 FINANCIERO CHILE 97.030.000-7 BANCO ESTADO CHILE CHILEAN PESOS SIX MONTHLY 4.35% - 22,900,812 - - - 22,900,81279.619.200-3 FINANCIERO CHILE 97.004.000-5 BANCO DE CHILE CHILE CHILEAN PESOS THREE MONTHLY 0.37% 9,796,621 - - - - 9,796,621

79.619.200-3 FINANCIERO CHILE 97.036.000-K BANCO SANTENDER CHILE CHILEAN PESOS THREE MONTHLY 5.29% - 21,182,018 - - - 21,182,018

79.619.200-3 FINANCIERO CHILE ** BONDS CHILE UF MATURITY 3.82% - 2,370,268 64,005,657 - - 66,375,92579.619.200-3 FINANCIERO CHILE ** BONDS CHILE UF SIX MONTHLY 4.02% - 2,494,571 4,703,846 4,346,670 54,204,245 65,749,332

79.619.200-3 FINANCIERO CHILE 97023000-9 ITAU CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.29% 85,154 - - - - 85,154

96.579.280-5 CN LIFE CHILE 97.080.000-k BANCO BICE CHILE CHILEAN PESOS MONTHLY 0.34% 8,119,134 - - - - 8,119,13496.579.280-5 CN LIFE CHILE 97.030.000-7 BANCO ESTADO CHILE CHILEAN PESOS MONTHLY 0.37% - 10,294,430 - - - 10,294,43096.579.280-5 CN LIFE CHILE 97.030.000-7 BANCO ESTADO CHILE US DOLLARS SIX MONTHLY 0.33% 3,000,660 - - - - 3,000,66096.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.27% 93,339 - - - - 93,33996.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.27% 77,433 - - - - 77,433

96.579.280-5 CN LIFE CHILE 97.023.000-9 ITAU CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.27% 63,957 - - - - 63,957

96.579.280-5 CN LIFE CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 0.27% 63,420 - - - - 63,420

96.579.280-5 CN LIFE CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 62,522 - - - - 62,522

96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 60,360 - - - - 60,360

96.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.27% 35,433 - - - - 35,433


96.579.280-5 CN LIFE CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 33,408 - - - - 33,408

96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.27% 30,537 - - - - 30,537


96.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.27% 20,865 - - - - 20,865



96.579.280-5 CN LIFE CHILE 97.011.000-3 BANCO INTERNACIONAL CHILE US DOLLARS SIX MONTHLY 0.27% 9,184 - - - - 9,184



96.579.280-5 CN LIFE CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 2,876 - - - - 2,876

96.579.280-5 CN LIFE CHILE 97.036.000-KBANCO SANTANDER CHILE

CHILE US DOLLARS SIX MONTHLY 0.43% 50,488 49,074 1,534,142 - - 1,633,704

96.579.280-5 CN LIFE CHILECREDIT SUISSE FIRST BOSTON INTERNATIONAL

ENGLAND US DOLLARS SIX MONTHLY 1.70% - 627,381 - - - 627,381

96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 23,078 22,171 541,091 - - 586,340

96.579.280-5 CN LIFE CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 0.30% 22,893 21,992 535,612 - - 580,497

96.579.280-5 CN LIFE CHILE 97.023.000-9 ITAU CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.48% 17,806 17,201 439,443 - - 474,450

96.579.280-5 CN LIFE CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY -0.98% - - 181,554 - - 181,554

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 0.82% 8,228 7,808 2,970 - - 19,006

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 0.90% - 21,810 (6,622) - - 15,188

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 0.84% 5,120 4,841 (1,861) - - 8,100

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 0.79% 2,624 2,497 1,194 - - 6,315

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 0.63% 19,301 18,426 (35,509) - - 2,218

96.654.180-6 CONSORCIO GENERALES CHILE 970044000-5 BANCO CHILE CHILE CHILEAN PESOS MONTHLY 0.37% 1,205,539 - - - - 1,205,539

96.654.180-6 CONSORCIO GENERALES CHILE 97004000-5 BANCO CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 22,013 - - - - 22,013

96.654.180-6 CONSORCIO GENERALES CHILE 97032000-8 BANCO BBVA CHILE US DOLLARS SIX MONTHLY 0.27% 27,930 - - - - 27,930

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE CHILEAN PESOS MONTHLY 0.36% 6,677,492 - - - - 6,677,492

99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 1.04% 16,805,404 - - - - 16,805,40499.012.000-5 CNS VIDA CHILE 97.030.000-7 BANCO ESTADO CHILE US DOLLARS MONTHLY 0.99% 67,083,237 - - - - 67,083,23799.012.000-5 CNS VIDA CHILE 97.030.000-7 BANCO ESTADO CHILE CHILEAN PESOS ANNUAL 0.37% - 7,619,696 - - - 7,619,69699.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE CHILEAN PESOS ANNUAL 0.37% - 16,244,963 - - - 16,244,96399.012.000-5 CNS VIDA CHILE BBVA ESPAÑA SPAIN US DOLLARS MONTHLY 1.80% 10,083,578 - - - - 10,083,578

99.012.000-5 CNS VIDA CHILE 97.036.000-KBANCO SANTANDER CHILE


99.012.000-5 CNS VIDA CHILEJP MORGAN CHASE BANK N.A - NEW YORK

USA US DOLLARS SIX MONTHLY 7.22% 194,039 186,956 5,130,752 - - 5,511,747



99.012.000-5 CNS VIDA CHILE MERRIL LYNCH USA US DOLLARS SIX MONTHLY 5.26% - - 1,104,911 - - 1,104,911

187

DEBTOR ID

NUMBER DEBTOR

NAME DEBTOR

COUNTRYCREDITOR ID

NUMBERCREDITOR


REPAYMENT TERMS

EFFECTIVE RATE %

NOMINAL RATE %

0 - 90 DAYS

ThCh$


1 - 3 YEARSThCh$

3 - 5 YEARSThCh$

OVER 5 YEARSThCh$

TOTALThCh$


USA US DOLLARS SIX MONTHLY 4.03% 11,811 11,263 869,917 - - 892,991

99.012.000-5 CNS VIDA CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 6.96% 61,087 58,119 726,386 - - 845,592

99.012.000-5 CNS VIDA CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 5.07% - 83,229 760,958 - - 844,187

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 6.94% 58,717 55,791 596,679 - - 711,187


CHILE US DOLLARS SIX MONTHLY 4.03% 8,768 8,675 619,798 - - 637,241

99.012.000-5 CNS VIDA CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 6.45% - 123,694 433,575 - - 557,269

99.012.000-5 CNS VIDA CHILE 97.032.000-8 Banco BBVA CHILE US DOLLARS SIX MONTHLY 1.62% - - 402,217 - - 402,217

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 4.63% - 53,978 328,734 - - 382,712



99.012.000-5 CNS VIDA CHILE HSBC BANK USA NY USA US DOLLARS SIX MONTHLY 5.25% 32,336 30,934 215,281 - - 278,551


99.012.000-5 CNS VIDA CHILE Credit Suisse USA US DOLLARS SIX MONTHLY 5.26% - - 254,032 - - 254,032

99.012.000-5 CNS VIDA CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 5.57% 35,841 34,200 175,418 - - 245,459


CHILE US DOLLARS SIX MONTHLY 6.48% - 244,491 - - - 244,491



99.012.000-5 CNS VIDA CHILECREDIT SUISSE FIRST BOSTON INTERNATIONAL


99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 3.88% - 64,072 152,168 - - 216,240



CHILE US DOLLARS SIX MONTHLY 6.65% - 197,494 - - - 197,494





99.012.000-5 CNS VIDA CHILE GOLDMAN SACHS USA PESOS SIX MONTHLY 0.00% - - 138,113 - - 138,113

99.012.000-5 CNS VIDA CHILE GOLDMAN SACHS USA PESOS SIX MONTHLY 0.00% - - 131,445 - - 131,445





99.012.000-5 CNS VIDA CHILE

JP MORGAN CHASE BANK N.A. (AGENCIA CHILE)


99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 5.26% 16,377 15,628 26,973 - - 58,978

99.012.000-5 CNS VIDA CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 5.29% 26,241 25,041 (1,715) - - 49,567

99.012.000-5 CNS VIDA CHILE GOLDMAN SACHS USA US DOLLARS SIX MONTHLY 4.99% - 84,692 (35,199) - - 49,493

99.012.000-5 CNS VIDA CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 4.84% 42,690 40,829 (41,303) - - 42,216


99.012.000-5 CNS VIDA CHILE HSBC BANK USA NY USA US DOLLARS SIX MONTHLY 4.83% 20,890 19,982 (21,382) - - 19,490

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 4.69% - 35,659 (17,759) - - 17,900

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 4.99% 34,581 33,117 (56,917) - - 10,781



CHILE US DOLLARS SIX MONTHLY 4.75% 26,754 25,661 (46,050) - - 6,365

99.012.000-5 CNS VIDA CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 532,986 - - - - 532,986

99.012.000-5 CNS VIDA CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 0.27% 452,121 - - - - 452,121

99.012.000-5 CNS VIDA CHILE 97.023.000-9 ITAU CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.27% 406,186 - - - - 406,186

188

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AP.


DEBTOR ID

NUMBER DEBTOR

NAME DEBTOR

COUNTRYCREDITOR ID

NUMBERCREDITOR


REPAYMENT TERMS

EFFECTIVE RATE %

NOMINAL RATE %

0 - 90 DAYS

ThCh$


1 - 3 YEARSThCh$

3 - 5 YEARSThCh$

OVER 5 YEARSThCh$

TOTALThCh$



CHILE US DOLLARS SIX MONTHLY 0.27% 391,202 - - - - 391,202

99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.27% 382,987 - - - - 382,98799.012.000-5 CNS VIDA CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 331,967 - - - - 331,967

99.012.000-5 CNS VIDA CHILE 97.011.000-3 BANCO INTERNACIONAL CHILE US DOLLARS SIX MONTHLY 0.27% 331,252 - - - - 331,252

99.012.000-5 CNS VIDA CHILE 97.004.000-5 BANCO DE CHILE CHILE UF SIX MONTHLY 0.25% - - 323,851 - - 323,85199.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.27% 322,093 - - - - 322,093



99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.27% 289,494 - - - - 289,494

99.012.000-5 CNS VIDA CHILE 97.036.000-K SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.27% 270,526 - - - - 270,52699.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.11% 217,605 - - - - 217,60599.012.000-5 CNS VIDA CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 193,366 - - - - 193,36699.012.000-5 CNS VIDA CHILE 97.036.000-K SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.16% 171,454 - - - - 171,454


99.012.000-5 CNS VIDA CHILE 97.030.000-7 BANCO ESTADO CHILE UF SIX MONTHLY 0.27% 168,168 - - - - 168,16899.012.000-5 CNS VIDA CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 167,333 - - - - 167,333






99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.27% 152,042 - - - - 152,042

99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.27% 151,455 - - - - 151,45599.012.000-5 CNS VIDA CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 146,514 - - - - 146,51499.012.000-5 CNS VIDA CHILE 97.036.000-K SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.27% 122,344 - - - - 122,34499.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.27% 120,347 - - - - 120,347


99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.22% 117,690 - - - - 117,690




99.012.000-5 CNS VIDA CHILE 97.030.000-7 BANCO ESTADO CHILE UF SIX MONTHLY 0.27% - - 95,250 - - 95,250

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.27% 93,914 - - - - 93,914

99.012.000-5 CNS VIDA CHILE 97.036.000-K SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.27% 89,190 - - - - 89,190








99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE UF SIX MONTHLY 0.25% - - 65,723 - - 65,723






99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.12% 53,968 - - - - 53,96899.012.000-5 CNS VIDA CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.22% 48,111 - - - - 48,11199.012.000-5 CNS VIDA CHILE 97.030.000-7 BANCO ESTADO CHILE UF SIX MONTHLY 0.27% - - 47,625 - - 47,62599.012.000-5 CNS VIDA CHILE 97.036.000-K SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.27% - 32,959 - - - 32,95999.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.27% 19,085 - - - - 19,085


**: hOLDERS OF BONDS ISSUED BY CONSORCIO FINANCIERO S.A. 374,739,259

189

DETAIL FOR BANK AND SUBSIDIARIES

BOOK VALUE AT MATURITY0 - 90 DAYS

ThCh$91 DAYS - 1 YEAR

ThCh$1 - 3 YEARS

ThCh$3 - 5 YEARS

ThCh$OVER 5 YEARS

ThCh$TOTALThCh$

Bank obligations 105,406,029 30,238,222 - - 40,429,829 176,074,080Current account 15,379,260 - - - - 15,379,260Derivative obligations 10,067,137 141,845 - - - 10,208,982Repurchase account statement and securities lending 323,802,928 - - - - 323,802,928Savings accounts and time deposits. 489,630,904 1,099,944,871 201,568,574 - - 1,791,144,349Payables to credit card operators 2,953 - - - - 2,953Other obligations 3,877,457 - - - - 3,877,457SUBTOTAL 2,320,490,009 2.320.490.009

Detail of Bonds as of December 31, 2016:

SERIES CURRENCYNOMINAL

VALUEMATURITY

DATEINTEREST PAYMENTS

PRINCIPAL PAYMENTS

PLACED IN ChILE/ABROAD

EFFECTIVE RATE

NOMINAL RATE

BOOK VALUE AT MATURITY

TOTAL ThCh$

VENCIMIENTO

0 - 90 DAYS91 DAYS - 1

YEAR 1 - 3 YEARS 3 - 5 YEARSOVER 5 YEARS

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$Subordinated Bonds

BCNO-A UF 1,500,000 10/31/2031 Six monthly At completion Chile 4.40% 4.00% - - - - 38,088,033 38,088,033

Subordinated Bonds

BCNO-G UF 1,000,000 4/1/2039 Six monthly At completion Chile 4.00% 4.00% - - - - 26,598,722 26,598,722

Subordinated Bonds

BCNO-K UF 1,500,000 11/1/2039 Six monthly At completion Chile 3.85% 3.80% - - - - 39,458,682 39,458,682

Current bonds

BCNO-C UF 1,500,000 7/5/2018 Six monthly At completion Chile 3.70% 3.54% - - - 39,635,819 - 39,635,819

Current bonds

BCNO-IChilean Pesos

35,250,000 4/1/2017 Six monthly At completion Chile 5.23% 5.80% - - 35,091,737 - - 35,091,737

Current bonds

BCNO-OChilean Pesos

36,900,000 5/1/2020 Six monthly At completion Chile 4.87% 5.90% - - - - 38,384,825 38,384,825

Current bonds

BCNO-L UF 1,500,000 5/1/2018 Six monthly At completion Chile 2.20% 2.20% - - - 39,667,620 - 39,667,620

Current bonds

BCNO-H UF 1,500,000 4/1/2019 Six monthly At completion Chile 2.70% 3.00% - - - 40,068,938 - 40,068,938

Current bonds

BCNO-U UF 3,000,000 9/1/2020 Six monthly At completion Chile 2.70% 3.00% - - - 78,355,324 - 78,355,324

Current bonds

BCNO-W UF 1,500,000 9/1/2040 Six monthly At completion Chile 3.54% 3.60% - - - - 40,347,627 40,347,627

Current bonds

BCNO-S UF 1,500,000 9/1/2040 Six monthly At completion Chile 2.35% 2.00% - - 39,690,414 - - 39,690,414

SUBTOTAL 455,387,741TOTAL 3,150,617,009

190

07 CH

AP.


Obligations as of December 31, 2015:

(Insurance, Parent Company and Others)

DEBTOR ID

NUMBER DEBTOR

NAME DEBTOR

COUNTRYCREDITOR ID

NUMBER CREDITOR NAMECREDITOR COUNTRY CURRENCY

REPAYMENT TERMS

EFFECTIVE RATE %

NOMINAL RATE %

0 - 90 DAYS

ThCh$


1 - 3 YEARSThCh$

3 - 5 YEARSThCh$

OVER 5 YEARSThCh$

TOTALThCh$

79.619.200-3 FINANCIERO CHILE 97.004.000-5 BANCO DE CHILE CHILE UF SIX MONTHLY 1.15% 9,790,891 - - - - 9,790,891 79.619.200-3 FINANCIERO CHILE 97.030.000-7 BANCO ESTADO CHILE CHILEAN PESOS SIX MONTHLY 4.16% 22,594,284 - - - - 22,594,284 79.619.200-3 FINANCIERO CHILE 97.036.000-K BANCO SANTANDER CHILE CHILEAN PESOS THREE MONTHLY 5.02% - 973,363 20,109,597 - - 21,082,960 79.619.200-3 FINANCIERO CHILE ** BONDS CHILE UF MATURITY 3.82% - 1,157,210 63,330,098 - - 64,487,308 79.619.200-3 FINANCIERO CHILE ** BONDS CHILE UF SIX MONTHLY 4.02% - 1,218,550 4,640,786 4,288,749 53,755,564 63,903,649 79.619.200-3 FINANCIERO CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS DOLARES 0.25% 65,509 - - - - 65,509 96.579.280-5 CN LIFE CHILE 97.080.000-k BANCO BICE CHILE CHILEAN PESOS MONTHLY 0.34% - 8,231,428 - - - 8,231,428 96.579.280-5 CN LIFE CHILE 97.030.000-7 BANCO ESTADO CHILE CHILEAN PESOS MONTHLY 0.38% - 10,069,120 - - - 10,069,120 96.579.280-5 CN LIFE CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 1.80% - - - 388,313 - 388,313

96.579.280-5 CN LIFE CHILECREDIT SUISSE FIRST BOSTON INTERNATIONAL

USA US DOLLARS SIX MONTHLY 6.77% - 171,744 1,080,231 - - 1,251,975

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 4.37% 801,300 - - - - 801,300

96.579.280-5 CN LIFE CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 5.33% 24,612 23,835 88,098 620,036 - 756,581 96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 7.11% 32,225 31,011 112,882 96,876 592,204 865,198

96.579.280-5 CN LIFE CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 7.11% 32,045 30,837 112,240 96,313 588,089 859,524

96.579.280-5 CN LIFE CHILE 97.036.000-K BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 4.64% 66,287 64,519 241,223 216,310 1,775,468 2,363,807

96.579.280-5 CN LIFE CHILE 97.036.000-K BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 5.86% 12,759 12,208 43,685 36,331 61,312 166,295

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 5.43% - 32,907 58,248 49,244 107,738 248,137

96.579.280-5 CN LIFE CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 5.64% 4,165 3,997 14,413 12,153 31,403 66,131





96.579.280-5 CN LIFE CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 6.38% - 21,950 37,905 30,935 52,807 143,597 96.579.280-5 CN LIFE CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 5.18% 2,618 2,517 9,131 7,771 22,070 44,107 96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 4.81% 15,976 15,381 55,985 47,893 78,054 213,289 96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 4.66% 17,820 17,193 62,844 54,188 128,960 281,005 96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 4.63% 16,568 15,999 58,603 50,724 148,900 290,794 96.579.280-5 CN LIFE CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 4.66% 11,754 11,341 41,463 35,765 87,276 187,599 96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 4.61% - 25,102 44,248 37,091 (102,663) 3,778

96.579.280-5 CN LIFE CHILE 97.036.000-K BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 4.61% - 22,326 39,298 32,873 (92,551) 1,946

96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 28,836 - - - - 28,836 96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 8,596 - - - - 8,596 96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.18% 43,268 - - - - 43,268 96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 38 - - - - 38 96.579.280-5 CN LIFE CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 14,521 - - - - 14,521 96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 2,963 - - - - 2,963 96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 32,498 - - - - 32,498 96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 7,383 - - - - 7,383 96.579.280-5 CN LIFE CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 5,013 - - - - 5,013 96.579.280-5 CN LIFE CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 187,118 - - - - 187,118 96.579.280-5 CN LIFE CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 15,311 - - - - 15,311 96.579.280-5 CN LIFE CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 16,009 - - - - 16,009

96.579.280-5 CN LIFE CHILE 97.036.000-K BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 104,141 - - - - 104,141

96.579.280-5 CN LIFE CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 16,657 - - - - 16,657 96.579.280-5 CN LIFE CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 1,457 - - - - 1,457 96.579.280-5 CN LIFE CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 26,657 - - - - 26,657

96.579.280-5 CN LIFE CHILE 96.929.050-2 DEUTSCHE BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 18,231 - - - - 18,231



96.579.280-5 CN LIFE CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.23% 7,531 - - - - 7,531 96.579.280-5 CN LIFE CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.23% 6,143 - - - - 6,143 96.579.280-5 CN LIFE CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 748 - - - - 748 96.579.280-5 CN LIFE CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 166,920 - - - - 166,920 96.579.280-5 CN LIFE CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 18,869 - - - - 18,869 96.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 9,821 - - - - 9,821 96.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 61,170 - - - - 61,170 96.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 164,151 - - - - 164,151 96.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 86,113 - - - - 86,113 96.579.280-5 CN LIFE CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 19,007 - - - - 19,007

96.654.180-6 CONSORCIO GENERALES CHILE 97.004.000-5 BANCO DE CHILE CHILE CHILEAN PESOS MONTHLY 0.38% 1,173,761 - - - - 1,173,761

96.654.180-6 CONSORCIO GENERALES CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS MONTHLY 0.30% 39,467 - - - - 39,467

96.654.180-6 CONSORCIO GENERALES CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS MONTHLY 0.30% 49,390 - - - - 49,390

96.654.180-6 CONSORCIO GENERALES CHILE 97.004.000-5 BANCO DE CHILE CHILE US DOLLARS MONTHLY 0.30% 76 - - - - 76

99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE CHILEAN PESOS ANNUAL 0.34% - 6,810,914 - - - 6,810,914

191

DEBTOR ID

NUMBER DEBTOR

NAME DEBTOR

COUNTRYCREDITOR ID


REPAYMENT TERMS

EFFECTIVE RATE %

NOMINAL RATE %

0 - 90 DAYS

ThCh$


1 - 3 YEARSThCh$

3 - 5 YEARSThCh$

OVER 5 YEARSThCh$

TOTALThCh$

99.012.000-5 CNS VIDA CHILE 97.030.000-7 BANCO ESTADO CHILE CHILEAN PESOS SIX MONTHLY 0.36% 7,486,735 - - - - 7,486,735 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE CHILEAN PESOS MONTHLY 0.34% - 16,282,605 - - - 16,282,605 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS ANNUAL 0.58% 25,499 16,973,457 - - - 16,998,956

99.012.000-5 CNS VIDA CHILE 97.036.000-K BANCO SANTANDER CHILE CHILE US DOLLARS ANNUAL 0.65% 17,767,777 - - - - 17,767,777

99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS THREE MONTHLY 0.71% - 17,801,563 - - - 17,801,563 99.012.000-5 CNS VIDA CHILE 97.030.000-7 BANCO ESTADO CHILE US DOLLARS ANNUAL 0.96% - 71,269,740 - - - 71,269,740 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.23% 67,891 - - - - 67,891 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 94,851 - - - - 94,851 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 43,823 - - - - 43,823 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 110,676 - - - - 110,676 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.18% 72,114 - - - - 72,114 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 105,856 - - - - 105,856 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 267,933 - - - - 267,933 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 80,815 - - - - 80,815 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 2,912 - - - - 2,912 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 4,034 - - - - 4,034 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 964 - - - - 964 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.29% 124,431 - - - - 124,431 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 328,260 - - - - 328,260 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 101,040 - - - - 101,040 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 464,055 - - - - 464,055 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 599,289 - - - - 599,289 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 111,124 - - - - 111,124 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 29,530 - - - - 29,530 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 189,429 - - - - 189,429 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 30,078 - - - - 30,078 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.30% 27,627 - - - - 27,627 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 287,848 - - - - 287,848 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 95,742 - - - - 95,742 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 92,356 - - - - 92,356 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 110,642 - - - - 110,642 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 452,625 - - - - 452,625 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 398,437 - - - - 398,437 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 166,054 - - - - 166,054 99.012.000-5 CNS VIDA CHILE 97.080.000-k BANCO BICE CHILE US DOLLARS SIX MONTHLY 0.30% 70,584 - - - - 70,584 99.012.000-5 CNS VIDA CHILE 97.023.000-9 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 194,685 - - - - 194,685 99.012.000-5 CNS VIDA CHILE 97.023.000-9 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 542,800 - - - - 542,800 99.012.000-5 CNS VIDA CHILE 97.023.000-9 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 670,087 - - - - 670,087 99.012.000-5 CNS VIDA CHILE 97.023.000-9 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 166,417 - - - - 166,417 99.012.000-5 CNS VIDA CHILE 97.023.000-9 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 59,224 - - - - 59,224

99.012.000-5 CNS VIDA CHILE 97.036.000-K BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 76,874 - - - - 76,874

99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.30% 278,803 - - - - 278,803 99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.30% 509,974 - - - - 509,974 99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.30% 356,844 - - - - 356,844 99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.30% 199,356 - - - - 199,356 99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.29% 314,552 - - - - 314,552 99.012.000-5 CNS VIDA CHILE 97.053.000-2 BANCO SECURITY CHILE US DOLLARS SIX MONTHLY 0.30% 52,301 - - - - 52,301 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.29% 444,159 - - - - 444,159 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 651,931 - - - - 651,931 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 320,784 - - - - 320,784 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 89,683 - - - - 89,683 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.29% 25,646 - - - - 25,646 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 42,059 - - - - 42,059 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 19,166 - - - - 19,166 99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 0.30% 8,741 - - - - 8,741

99.012.000-5 CNS VIDA CHILE 96.929.050-2 DEUTSCHE BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.18% 192,725 - - - - 192,725




99.012.000-5 CNS VIDA CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.23% 35,980 - - - - 35,980 99.012.000-5 CNS VIDA CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 114,007 - - - - 114,007 99.012.000-5 CNS VIDA CHILE 97.951.000-4 HSBC BANK CHILE CHILE US DOLLARS SIX MONTHLY 0.30% 8,598 - - - - 8,598

99.012.000-5 CNS VIDA CHILE 97.043.000-8JP MORGAN CHASE BANK N.A. (AGENCIA CHILE)














192

07 CH

AP.


DEBTOR ID

NUMBER DEBTOR

NAME DEBTOR

COUNTRYCREDITOR ID


REPAYMENT TERMS

EFFECTIVE RATE %

NOMINAL RATE %

0 - 90 DAYS

ThCh$


1 - 3 YEARSThCh$

3 - 5 YEARSThCh$

OVER 5 YEARSThCh$

TOTALThCh$

99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 89,854 - - - - 89,854 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 1,088,836 - - - - 1,088,836 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 493,944 - - - - 493,944 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 584,001 - - - - 584,001 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 317,248 - - - - 317,248 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 3,197 - - - - 3,197 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 37,617 - - - - 37,617 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 1,261 - - - - 1,261 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 110,460 - - - - 110,460 99.012.000-5 CNS VIDA CHILE 97.018.000-1 SCOTIABANK CHILE US DOLLARS SIX MONTHLY 0.30% 3,969 - - - - 3,969 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 0.29% 866 - - - - 866

99.012.000-5 CNS VIDA CHILE 97.036.000-k BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 6.48% - 78,365 455,107 - - 533,472

99.012.000-5 CNS VIDA CHILE 97.036.000-k BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 6.65% - 84,852 518,680 - - 603,532


USA US DOLLARS SIX MONTHLY 10.20% - 138,008 540,177 - - 678,185




99.012.000-5 CNS VIDA CHILE 97.023.000-9 CORPBANCA CHILE US DOLLARS SIX MONTHLY 6.31% - 682,856 - - - 682,856

99.012.000-5 CNS VIDA CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 6.45% - 96,801 960,946 - - 1,057,747

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 6.94% 76,015 72,541 1,131,910 - - 1,280,466

99.012.000-5 CNS VIDA CHILE BANK OF AMERICA N.Y USA US DOLLARS SIX MONTHLY 6.96% 78,320 74,802 1,257,054 - - 1,410,176

99.012.000-5 CNS VIDA CHILE 97.036.000-k BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 5.80% 43,860 42,508 1,303,673 - - 1,390,041






99.012.000-5 CNS VIDA CHILE 97.036.000-k BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 4.03% 14,414 14,209 891,486 - - 920,109




99.012.000-5 CNS VIDA CHILE 97.036.000-k BANCO SANTANDER CHILE CHILE US DOLLARS SIX MONTHLY 4.98% 10,697 142,524 398,325 - - 551,546

99.012.000-5 CNS VIDA CHILE 97.023.000-9 BANCO DE CHILE CHILE US DOLLARS SIX MONTHLY 5.07% - 114,420 1,412,136 - - 1,526,556


99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 3.88% - 110,319 1,407,742 - - 1,518,061















99.012.000-5 CNS VIDA CHILE HSBC BANK USA NY USA US DOLLARS SIX MONTHLY 4.83% 35,215 33,997 628,022 - - 697,234 99.012.000-5 CNS VIDA CHILE HSBC BANK USA NY USA US DOLLARS SIX MONTHLY 5.25% 53,883 51,949 1,059,685 - - 1,165,517

99.012.000-5 CNS VIDA CHILE DEUTSCHE BANK AG LONDON ENGLAND US DOLLARS SIX MONTHLY 5.57% 58,454 56,220 1,018,022 - - 1,132,696

99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 4.63% - 78,681 886,393 - - 965,074 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 5.68% 32,198 30,976 617,581 - - 680,755 99.012.000-5 CNS VIDA CHILE 97.006.000-6 BANCO BCI CHILE US DOLLARS SIX MONTHLY 5.26% 30,261 29,166 587,887 - - 647,314 99.012.000-5 CNS VIDA CHILE 97.032.000-8 BANCO BBVA CHILE CHILE US DOLLARS SIX MONTHLY 4.69% - 60,856 546,760 - - 607,616 99.012.000-5 CNS VIDA CHILE 97.032.000-8 Banco BBVA CHILE US DOLLARS SIX MONTHLY 1.62% - - 838,369 - - 838,369 99.012.000-5 CNS VIDA CHILE MERRIL LYNCH USA US DOLLARS SIX MONTHLY 5.26% - 2,248,565 - - - 2,248,565 99.012.000-5 CNS VIDA CHILE Credit Suisse USA US DOLLARS SIX MONTHLY 5.26% - 511,359 - - - 511,359

99.012.000-5 CNS VIDA CHILE BANCO SANTANDER ESPAÑA SPAIN US DOLLARS DAILY 1.47% 53,279,688 - - - - 53,279,688

**: hOLDERS OF BONDS ISSUED BY CONSORCIO FINANCIERO S.A. 493,295,971

193

DETAIL FOR BANK AND SUBSIDIARIES

BOOK VALUE AT MATURITY0 - 90 DAYS

ThCh$91 DAYS - 1 YEAR

ThCh$1 - 3 YEARS

ThCh$3 - 5 YEARS

ThCh$OVER 5 YEARS

ThCh$TOTALThCh$

Bank obligations 123,469,859 - - - - 123,469,859Current account 3,556,282 - - - - 3,556,282Derivative obligations 17,573,223 141,845 - - - 17,715,068Repurchase account statement and securities lending 234,176,356 - - - - 234,176,356Savings accounts and time deposits. 404,445,422 1,149,589,314 57,213,201 - - 1,611,247,937Payables to credit card operators 16,511 - - - - 16,511Other obligations 45,257,523 - - - - 45,257,523SUBTOTAL 2,035,439,536

Detail of bonds as of December 31, 2015:

SERIES CURRENCYNOMINAL

VALUEMATURITY

DATEINTEREST PAYMENTS

PRINCIPAL PAYMENTS

PLACED IN ChILE/ABROAD

EFFECTIVE RATE

NOMINAL RATE

BOOK VALUE AT MATURITY

TOTAL ThCh$

VENCIMIENTO 0 - 90 DAYS

91 DAYS - 1 YEAR

1 - 3 YEARS

3 - 5 YEARS

OVER 5 YEARS

ThCh$ ThCh$ ThCh$ ThCh$ ThCh$Subordinated Bonds

BCNO-A UF 1,500,000 10/31/2031 Six monthly At completion Chile 4.40% 4.00% - - 36,953,263 36,953,263

Subordinated Bonds

BCNO-G UF 1,000,000 4/1/2039 Six monthly At completion Chile 4.00% 4.00% - - 25,870,403 25,870,403

Subordinated Bonds

BCNO-K UF 1,500,000 11/1/2039 Six monthly At completion Chile 3.85% 3.80% - - 38,370,470 38,370,470

Current bonds

BCNO-DChilean Pesos

22,800,000 7/5/2016 Six monthly At completion Chile 6.40% 6.39% - - 21,539,026 21,539,026

Current bonds

BCNO-C UF 1,500,000 7/5/2018 Six monthly At completion Chile 3.70% 3.54% - - 38,572,379 38,572,379

Current bonds

BCNO-IChilean Pesos


Current bonds

BCNO-OChilean Pesos


Current bonds

BCNO-L UF 1,500,000 5/1/2018 Six monthly At completion Chile 2.20% 2.20% - - 38,581,453 38,581,453

Current bonds

BCNO-H UF 1,500,000 4/1/2019 Six monthly At completion Chile 2.70% 3.00% - - 39,080,245 39,080,245

SUBTOTAL 312,910,920 TOTAL 2,841,646,427

NOTE 22 - EMPLOYEE BENEFIT PROVISIONS

Employee benefit provisions were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

Vacation provision 3,323,683 3,212,378Bonus provision 4,239,039 3,298,790Other benefits 364,386 455,660Employee termination provision 3,894,991 3,177,061TOTAL 11,822,099 10,143,889

NOTE 23 – OThER PROVISIONS

Other provisions as of December 31, 2016 and 2015 were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

PARENT COMPANY AND OThERSMinimum dividends 41,324,110 26,455,800Contingent credit risk provisions 1,626,630 1,108,645TOTAL 42,950,740 27,564,445

194

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NOTE 24 – EQUITY

A) CAPITAL ISSUED, SUBSCRIBED AND PAID Subscribed and paid up capital as of December 31, 2016, amounts to ThCh$ 288,141.592, represented by 136,952,063 shares with no par value, and as of December 31, 2015, it amounts to ThCh$ 194,358.392, represented by 125,671,000 shares with no par value.

SERIES NUMBER OF SUBSCRIBED ShARES NUMBER OF PAID ShARES NUMBER OF VOTING ShARES SUBSCRIBED CAPITAL ThCh$SINGLE 136,952,063 136,952,063 136,952,063 288,141,592

B) OThER RESERVES Other reserves

Other reserves were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

SHARE VALUATION RESERVE FOR ALMENDRAL S.A. 7,587,874 2,311,391MATCHING RESERVE FOR CNS VIDA (7,444,009) 1,940,797MATCHING RESERVE FOR CN LIFE (12,963,189) (9,446,233)INSTRUMENT VALUATION RESERVE FOR THE SALE OF BANCO CONSORCIO (2,628,602) (29,559,111)SHARE VALUATION RESERVE FOR THE STOCK EXCHANGE 1,627,022 1,627,022RESERVA CF INV. PERU S.A.C. (LA POSITIVA) 4,345,627 -OTHER (412,135) (481,461)TOTAL (9,887,412) (33,607,595)

C) MINIMUM DIVIDENDSThe minimum legal dividend payable as of December 31, 2016 and December 31, 2015 is ThCh$ 41,324,110 and ThCh$ 26,455,801, respectively, and equals 30% of net income.

D) MANAGEMENT OF RISKS TO CAPITALThe corporate mission at Consorcio Financiero S.A. includes maintaining a strong equity position in each of its subsidiaries, to create value for shareholders and strengthen the confidence of all stakeholders.

Consorcio aims to exceed regulatory requirements and build sufficient equity to achieve the company’s strategic objectives and business plans, which are consistent with the size, nature and complexity of the entities’ activities.

The Board of Directors of each subsidiary is responsible for the overall approach to capital and risk management. It periodically monitors the entities’ solvency by following financial and operational performance indicators and market conditions. The Parent company’s main subsidiaries have Directors’ Committees, which analyze the sufficiency and structure of the subsidiary’s equity in relation to Consorcio objectives.

The following regulated subsidiaries have a minimum capital requirement.

UFCompañía de Seguros de Vida Consorcio Nacional de Seguros S.A. 90,000CN Life Compañía de Seguros S.A. 90,000Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. 90,000Banco Consorcio and Subsidiaries 800,000Consorcio Corredores de Bolsa S.A. 14,000

At the time these consolidated financial statements were prepared, these subsidiaries met the minimum capital required.

195

NOTE 25 - REVENUE AND EXPENSES

I) REVENUE FROM ORDINARY ACTIVITIES AND OThER OPERATIONAL INCOME

a) Revenue from ordinary activities and other operational income

Ordinary revenue was as follows:

12-31-2016ThCh$

12-31-2015ThCh$

PARENT COMPANY AND OThERSRevenueIncome earned from investments 1,743,409 10,648,222Investment income 346,362 3,110,550TOTAL PARENT COMPANY AND OThERS 2,089,771 13,758,772

INSURANCERevenuePremium income 871,557,786 754,651,254Gain on the sale of financial assets 31,994,414 32,743,349Property investment income 56,283,863 47,457,098Income earned from investments 264,102,316 178,504,282Investment income 4,142,246 4,726,975TOTAL INSURANCE 1,228,080,625 1,018,082,958

BANK AND SUBSIDIARIESInterestRepurchase agreements 80,875 108,710Bank loans 307,899 735,926Commercial loans 72,001,980 54,663,119Housing loans 2,808,861 2,642,202Consumer loans 14,903,109 14,866,142Investment instruments 30,485,805 24,951,321Financial instrument trading 23,488,099 15,798,988Income from hedge accounting 92,521 77,992Other interest income 519,578 732,828

INDEXATIONCommercial loans 14,822,635 15,544,726Housing loans 2,095,136 2,669,569Investment instruments 6,695,314 6,485,351Financial instrument trading 5,854,190 5,053,501

COMMISSIONSGuarantees and letters of credit 78,583 96,986Card services 237,003 185,749Account administration 215,309 149,972Collections and payments 106,394 172,634Securities brokerage and management 1,982,907 1,414,185Other commissions 5,414,704 6,353,343

FINANCIAL TRANSACTIONSNet income from financial instrument trading 25,406,028 -Other income 5,563 2,955

OThER OPERATING INCOMELeasing income - 3,027,414TOTAL BANK AND SUBSIDIARIES 207,602,493 155,733,613

TOTAL OPERATING REVENUE 1,437,772,889 1,187,575,343

196

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b) Cost of Sales

Cost of sales was as follows:

12-31-2016ThCh$

12-31-2015ThCh$

PARENT COMPANY AND OThERSINTERESTOther interest or indexation expenses 70,002 -TOTAL PARENT COMPANY AND OThERS 70,002 -

INSURANCEAdjustment for technical reserves 61,015,852 74,996,334Claims costs 904,819,474 768,175,202Brokerage costs 41,841,652 36,109,677Other costs 1,294,049 1,542,449TOTAL INSURANCE 1,008,971,027 880,823,662

BANK AND SUBSIDIARIESINTERESTDemand deposits 260,638 169,926Repurchase agreements 7,337,622 7,708,200Savings accounts and time deposits 48,589,941 57,045,188Bank borrowings 3,472,408 1,384,460Debt instruments issued 15,111,061 12,067,667Other interest expenses 2,871,303 4,005,590Net income from financial instrument trading - 10,838,762

INDEXATIONSavings accounts and time deposits 5,629,783 9,049,876Debt instruments issued 6,469,250 4,530,701Other financial obligations 457,242 788,875Other interest expenses 244,953 160,128

COMMISSIONSSecurities transaction fee 364,782 406,377Other commissions 1,233,109 1,017,586TOTAL BANK AND SUBSIDIARIES 92,042,092 109,173,336

TOTAL COST OF SALES 1,101,083,121 989,996,998

c) Other expenses, by function

Other expenses, by function were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

PARENT COMPANY AND OThERSSundry expenses 12,713 -Financial expenses 7,594,709 5,725,625Investment loss 600,107 28,668TOTAL PARENT COMPANY AND OThERS 8,207,529 5,754,293

INSURANCEDepreciation 3,539,170 2,862,208Sundry expenses 334,450 378,454Financial expenses 4,038,882 2,860,912Real estate management expenses 3,836,353 5,658,318TOTAL INSURANCE 11,748,855 11,759,892

BANK AND SUBSIDIARIESSundry expenses 1,218,342 705,013Financial expenses 7,869 51,945TOTAL BANK AND SUBSIDIARIES 1,226,211 756,958

TOTAL OThER EXPENSES BY FUNCTION 21,182,595 18,271,143

197

d) Other income

Other income was as follows:

12-31-2016ThCh$

12-31-2015ThCh$

PARENT COMPANY AND OThERSInterest earned 49,730 164,029Services provided 50,267 23,470TOTAL PARENT COMPANY AND OThERS 99,997 187,499

INSURANCEInterest earned 5,082,260 4,564,509Services provided 1,794,454 1,432,268Other income - 21,719TOTAL INSURANCE 6,876,714 6,018,496

BANK AND SUBSIDIARIESInterest earned 433,269 294,043Other income 698,110 297,744TOTAL BANK AND SUBSIDIARIES 1,131,379 591,787

TOTAL OThER INCOME 8,108,090 6,797,782

NOTE 26 - ADMINISTRATIVE EXPENSES

Administrative expenses were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

Remuneration 47,980,169 42,402,221Advisory Services 5,857,661 4,201,866Maintenance expenses 2,956,407 1,416,491Office supplies 594,315 534,687Depreciation and amortization 2,752,648 2,511,892Leases 1,763,731 1,690,640Insurance 549,660 507,600IT and communications expenses 3,279,604 3,178,526Subcontracted services 2,181,116 2,054,138Board expenses 532,580 512,153Advertising 3,805,259 4,428,232Taxes, property taxes and contributions to SBIF 6,206,111 5,042,047Provisions for loan losses 10,216,157 6,357,325Inspection expenses 433,004 343,437Distribution channel expenses 13,698,818 4,664,353Commission and custody expenses 3,994,207 1,475,219General expenses (*) 2,915,802 6,044,125 TOTAL 109,717,249 87,364,952

(*) These include communications services, mail, shared building expenses, etc.

NOTE 27 - REMUNERATION AND PERSONNEL EXPENSES

Remuneration and personnel expenses were as follows:

12-31-2016ThCh$

12-31-2015ThCh$

Wages and salaries 37,078,351 32,738,925Employee benefits 10,901,818 9,663,296TOTAL 47,980,169 42,402,221

ThCh$ ThCh$Senior management remuneration 3,308,754 2,720,253

198

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NOTE 28 – CURRENCY

Assets and liabilities by currency as of December 31, 2016 and 2015 are as follows:

CURRENT ASSETS12-31-2016

ThCh$12-31-2015

ThCh$CASh AND CASh EQUIVALENTS 33,324,241 73,466,833

US$ 4,493,383 32,711,291Euro 3,096,544 485,698UF - -Chilean peso 25,731,625 38,550,654Other 2,689 1,719,190

CURRENT TAX ASSETS 8,781,776 10,580,849US$ - -Euro - -UF - -Chilean peso 8,777,942 10,580,849Other 3,834 -

RECEIVABLES FROM RELATED PARTIES 23,469,278 18,593,388US$ - -Euro - -UF 23,469,278 18,593,388Chilean peso - -Other - -

OThER NON-FINANCIAL ASSETS 78,517,039 111,387,302US$ 5,381,202 1,925,517Euro 30,517 44UF 4,685,251 2,199,683Chilean peso 68,374,662 107,159,612Other 45,407 102,446

TRADE AND OThER RECEIVABLES 2,380,446,629 2,083,095,054US$ 356,251,160 315,726,092Euro - -UF 1,069,228,596 1,028,819,023Chilean peso 954,966,873 738,549,939Other - -

OThER FINANCIAL ASSETS 6,374,052,859 5,548,140,294US$ 2,420,871,387 1,982,059,217Euro 81,652,765 25,639,906UF 1,990,864,206 2,607,219,974Chilean peso 1,222,860,877 933,160,973Other 657,803,624 60,224

DEFERRED TAX ASSETS 67,215,755 71,963,694US$ - -Euro - -UF - -Chilean peso 67,215,755 71,963,694Other - -

INVESTMENTS ACCOUNTED FOR USING ThE EQUITY METhOD 92,817,012 93,534,319US$ - -Euro - -UF - -Chilean peso 51,574,928 57,307,757Other 41,242,084 36,226,562

INTANGIBLE ASSETS OThER ThAN GOODWILL 4,130,044 3,858,159US$ - -Euro - -UF - -Chilean peso 4,130,044 3,858,159Other - -

GOODWILL 7,922,880 7,380,177US$ - -Euro - -UF - -Chilean peso 7,922,880 7,380,177Other - -

PROPERTY INVESTMENTS 422,189,570 370,895,082US$ - -Euro - -UF - -Chilean peso 422,189,570 370,895,082Other - -

PROPERTY, PLANT AND EQUIPMENT 27,575,270 29,343,034US$ - -Euro - -UF - -Chilean peso 27,575,270 29,343,034Other - -

TOTAL ASSETS 9,520,442,353 8,422,238,185US$ 2,786,997,132 2,332,422,117EURO 84,779,826 26,125,648UF 3,088,247,331 3,656,832,068ChILEAN PESO 2,861,320,426 2,368,749,930OThER 699,097,638 38,108,422

199


0 - 90 DAYSThCh$

91 DAYS TO 1 YEAR

ThCh$1 - 3 YEARS

ThCh$3 - 5 YEARS

ThCh$OVER 5 YEARS

ThCh$TOTALThCh$

LIABILITIESRELATED PARTY PAYABLES - - 411,786 - - 411,786

US$ - - - - - -Euro - - - - - -UF - - - - - -Chilean pesos - - 411,786 - - 411,786Other - - - - - -

CURRENT TAX LIABILITIES 1,262,672 7,159,802 - - - 8,422,474US$ - - - - - -Euro - - - - - -UF - - - - - -Chilean pesos 1,262,672 7,159,802 - - - 8,422,474Other - - - - - -

OThER NON-FINANCIAL LIABILITIES 44,862,157 34,768,574 - - - 79,630,731US$ - 2,100,601 - - - 2,100,601Euro - - - - - -UF 38,210,014 - - - - 38,210,014Chilean pesos 6,652,143 32,667,973 - - - 39,320,116Other - - - - - -

TRADE AND OThER PAYABLES 752,650,963 264,276,723 646,791,898 566,133,429 3,028,017,076 5,257,870,089US$ - - - - - -Euro - - - - - -UF 62,968,153 51,641,968 108,716,737 77,370,977 357,660,267 658,358,102Chilean pesos 689,682,810 212,634,755 538,075,161 488,762,452 2,670,356,809 4,599,511,987Other - - - - - -

DEFERRED TAX LIABILITIES 44,801,294 13,251,837 - - - 58,053,131US$ - - - - - -Euro - - - - - -UF - - - - - -Chilean pesos 44,801,294 13,251,837 - - - 58,053,131Other - - - - - -

OThER FINANCIAL LIABILITIES 1,080,734,914 1,216,451,177 373,844,584 202,074,371 277,511,963 3,150,617,009US$ 297,835,147 194,619,313 9,939,102 - - 502,393,562Euro 120,058,009 - - - - 120,058,009UF 26,741,681 238,159,281 173,289,394 197,688,538 224,115,559 859,994,453Chilean pesos 636,100,077 783,672,583 190,616,088 4,385,833 53,396,404 1,668,170,985Other - - - - - -

EMPLOYEE BENEFITS PROVISION 708,011 11,114,088 - - - 11,822,099US$ - - - - - -Euro - - - - - -UF - - - - - -Chilean pesos 708,011 11,114,088 - - - 11,822,099Other - - - - - -

OThER PROVISIONS - 42,950,740 - - - 42,950,740US$ - - - - - -Euro - - - - - -UF - - - - - -Chilean pesos - 42,950,740 - - - 42,950,740Other - - - - - -

TOTAL LIABILITIES 1,925,020,011 1,589,972,941 1,021,048,268 768,207,800 3,305,529,039 8,609,778,059US$ 297,835,147 196,719,914 9,939,102 - - 504,494,163EURO 120,058,009 - - - - 120,058,009UF 127,919,848 289,801,249 282,006,131 275,059,515 581,775,826 1,556,562,569ChILEAN PESOS 1,379,207,007 1,103,451,778 729,103,035 493,148,285 2,723,753,213 6,428,663,318OThER - - - - - -

200

07 CH

AP.



0 - 90 DAYSThCh$

91 DAYS TO 1 YEAR

ThCh$1 - 3 YEARS

ThCh$3 - 5 YEARS

ThCh$OVER 5 YEARS

ThCh$TOTALThCh$

RELATED PARTY PAYABLES 3,944,100 - - - - 3,944,100 US$ - - - - - - Euro - - - - - - UF 3,944,100 - - - - 3,944,100 Chilean peso - - - - - - Other - - - - - -

CURRENT TAX LIABILITIES 2,870,069 4,702,549 - - - 7,572,618 US$ - - - - - - Euro - - - - - - UF - - - - - - Chilean peso 2,870,069 4,501,476 - - - 7,371,545 Other - 201,073 - - - 201,073

OThER NON-FINANCIAL LIABILITIES 53,633,154 32,768,165 - - - 86,401,319 US$ - 22,721 - - - 22,721 Euro - - - - - - UF 32,511,631 - - - - 32,511,631 Chilean peso 21,121,523 32,745,444 - - - 53,866,967 Other - - - - - -

TRADE AND OThER PAYABLES 683,104,389 238,593,882 589,649,085 511,645,331 2,658,477,756 4,681,470,443 US$ - - - - - - Euro - - - - - - UF 649,182,013 238,593,882 589,649,085 511,645,331 2,658,477,756 4,647,548,067 Chilean peso 18,622,823 - - - - 18,622,823 Other 15,299,553 - - - - 15,299,553

DEFERRED TAX LIABILITIES 7,726,618 41,066,773 - - - 48,793,391 US$ - - - - - - Euro - - - - - - UF - - - - - - Chilean peso 7,726,618 41,066,773 - - - 48,793,391 Other - - - - - -

OThER FINANCIAL LIABILITIES 960,257,261 1,307,090,878 254,321,842 122,504,197 197,472,249 2,841,646,427 US$ 354,269,629 421,965,201 52,225,108 1,981,371 3,842,894 834,284,203 Euro 77,538,495 - - - - 77,538,495 UF 23,042,483 200,396,696 18,942,960 116,234,077 139,873,791 498,490,007 Chilean peso 505,406,654 684,728,981 183,153,774 4,288,749 53,755,564 1,431,333,722 Other - - - - - -

EMPLOYEE BENEFITS PROVISION 582,175 9,561,714 - - - 10,143,889 US$ - - - - - - Euro - - - - - - UF - - - - - - Chilean peso 582,175 9,561,714 - - - 10,143,889 Other - - - - - -

OThER PROVISIONS - 27,564,445 - - - 27,564,445 US$ - - - - - - Euro - - - - - - UF - - - - - - Chilean peso - 27,564,445 - - - 27,564,445 Other - - - - - -

TOTAL LIABILITIES 1,712,117,766 1,661,348,406 843,970,927 634,149,528 2,855,950,005 7,707,536,632 US$ 354,269,629 421,987,922 52,225,108 1,981,371 3,842,894 834,306,924 EURO 77,538,495 - - - - 77,538,495 UF 708,680,227 438,990,578 608,592,045 627,879,408 2,798,351,547 5,182,493,805 ChILEAN PESO 556,329,862 800,168,833 183,153,774 4,288,749 53,755,564 1,597,696,782 OThER 15,299,553 201,073 - - - 15,500,626

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NOTE 29 - EARNINGS PER ShARE

Earnings per share for the period were as follows:

EARNINGS PER ShARE12-31-2016

ThCh$12-31-2015

ThCh$BASIC EARNINGS PER ShAREBasic earnings per share on continued operations 1,001.40 701.72Basic earnings per share on discontinued operations - -BASIC EARNINGS PER ShARE 1,001.40 701.72

NOTE 30 – ENVIRONMENT

The Company and its subsidiaries within the Parent Company, Insurance and Banking segments do not do anything that could directly protect the environment.

NOTE 31 – RISK MANAGEMENT POLICIES

The Board of Consorcio Financiero S.A. (hereinafter the “Parent company”) aims to strategically develop “Appropriate risk management and control” using an Integrated Risk Management System. This system would contribute to the creation of value for shareholders, customers, employees and other stakeholders, within the framework of its mission, vision and corporate values.

The Parent company has strategic objectives that are regularly reviewed and monitored. One of these is fulfilled by its Integrated Risk Management System. It is also aligned with best international practice and with the new approach to risk-based regulation, adopted by the Chilean Securities and Insurance Supervisor (SVS) and the Chilean Banks and Financial Institutions Supervisor (SBIF).

The group includes companies that offer services in the areas of insurance, pensions, savings and banking, primarily through three insurance companies in Chile, a bank, a stock broker and a fund manager. Since December 2015, it has had a stake in a life insurance company in Peru.

These subsidiaries are exposed to various risks managed by specialist units within each company, through risk identification, assessment, mitigation, control and reporting according to the nature, size and complexity of each business.

In accordance with the acceptable risk profile defined for each company, subsidiaries have traditionally maintained a solid solvency position, with tolerances with regard to regulatory requirements. Subsidiaries benefit from the strong commitment of Consorcio Financiero’s shareholders, which is reflected in active and direct shareholder participation on the subsidiaries’ Boards of Directors and their many committees.

CORPORATE GOVERNANCEConsorcio Financiero S.A. is constantly seeking to generate mechanisms that facilitate relationships among the its business units in accordance with current regulations, thus taking advantage of synergies in terms of finance, operations and management. It leads the process of planning and defining strategic objectives for each individual company. Each has its own Board and its specific committees and functions that make up its governance, within the overall framework defined by Consorcio.

The CEO of the Parent company is responsible for the general direction taken by the Parent company and closely supports the subsidiaries in the achievement of their strategic goals and objectives, to create further corporate value.

I. Banco Consorcio and subsidiaries

The major risks to which Banco Consorcio and its subsidiaries are exposed through their business strategies are described in this note. Similarly, a brief review of the tools, models and procedures used by the company to measure, monitor and control such risks is included.

The major risks faced by Banco Consorcio and its subsidiaries are essentially credit risk, liquidity risk, market risk and operational risk. Given the importance of risk management for the business success of the company, Banco Consorcio and its subsidiaries have developed an infrastructure to adequately manage risks using an organizational structure, into which policies, procedures, models, limits and controls have been embedded.

Policy Banco Consorcio and its subsidiaries have implemented best practice to manage the risks faced while performing their business activities. In view of the foregoing, they have developed policies and models to quantify and monitor credit risk, liquidity risk, market risk and operational risk. These are the central components of overall risk and capital management.

Risk management is the responsibility of the Board and Management at Banco Consorcio and of the corporate governance for each subsidiary,

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and is a key element of their daily operations. Risk Management enables Banco Consorcio to identify financially sustainable solutions in the short and long term. The company focuses on balanced risk management and a solid capital structure.

Banco Consorcio and its subsidiaries have identified the following major risks:

• Credit risk. The risk of loss resulting from loan counterparties being unable to meet their loan commitments.

• Market risk. The risk of loss of market value as a result of adverse movements in financial markets (interest rates and exchange rates).

• Liquidity risk. The risk of loss due to insufficient liquidity to meet current payment commitments.

• Operational risk. The risk of loss resulting from inadequate internal processes, or due to problems caused by staff, systems or specific internal events.

Organizational Structure The Board is the highest authority in Banco Consorcio. The Board delegates responsibility to management of the Bank and its subsidiaries and various special committees with regard to risk management, limits and monitoring. The Board is responsible for defining risk limits, monitoring risk and approving general guidelines. It is also responsible for the overall approach to risk and capital management, in addition to being familiar with regulatory capital requirements and internal models. Risk activities and exposures need to be reported to the Board on a regular basis. Most of these responsibilities have been delegated to specialist committees, where Directors participate, nevertheless, the Board should be familiar with these matters.

The Board delegates daily responsibility to the bank’s management, which executes general instructions. Responsibility for risk monitoring and management is assigned to various committees, each one chaired by a member of the Board.

The main committees of Banco Consorcio and its subsidiaries are described below:

• The Assets and Liabilities Committee (CAPA) is responsible for the overall management of the bank’s financial position statement and liquidity, and evaluates the main market risks, capital needs and the implementation of capital policy. Furthermore, CAPA approves models for measuring liquidity and market risk, and the associated limits.

• The Portfolio, Collection and Credit Risk Committee and the Operational Risk Committee are responsible for controlling and monitoring the management of these risks. Both committees approve risk exposure within the limits established by the Board.

• The Operational Risk Committee and Technology, Information Security and Continuity Committee regularly review losses incurred and define plans to remedy their causes, as well as mitigating measures.

Banco Consorcio and its subsidiaries have a risk management department that is responsible for the identification, measurement, monitoring and control of credit risk, liquidity risk and market risk, as defined by the Board and its specific committees. The risk management department regularly reports to each of the committees described above and to the Board.

Major risks to the bank and its subsidiaries Credit RiskThe risk of loss resulting from the breach of an obligation to the Bank and its subsidiaries by a debtor, primarily originating in accounts receivable from clients, investment instruments and financial derivatives.

The Bank and its subsidiaries have a structure of credit risk levels, and have set limits to the concentration of that risk by individual debtors, groups of debtors and industry segments. Such risks are constantly monitored by management. The limits by debtor, groups of debtors, products and industries are reviewed at least once a year and approved by the Board.

Exposure to credit risks is managed through regular analysis of debtors and potential debtors’ ability to meet payment commitments in accordance with the contractual terms of their loans.

Financial derivative contracts. The Bank and its subsidiaries maintain strict controls over positions in derivative contracts negotiated directly with their counterparts. Credit risk is limited to the fair value of those contracts favorable for the bank and its subsidiaries (asset position), in addition to the potential risk estimated as a percentage of the contract notional amount and which depends on its remaining term. This exposure to credit risk is managed through limits on loans to customers, along with potential exposure due to fluctuations in the market. To mitigate these risks, loans often require a guarantee when the counterpart is from the non-financial sector.

Financial instruments. The Bank and its subsidiaries measure the probability of unrecoverability of financial instruments from their issuers using internal assessments and external ratings, such as independent credit rating agencies. The company has approved credit facilities to issuers or groups of issuers depending on an assessment of their credit risk.

Guarantees. Guarantees are maintained in favor of the bank to mitigate credit risk. The main customer guarantees follow:

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• The main guarantees for loans to companies are mortgages, pledges and fiscal guarantees such as FOGAPE and COBEX (foreign trade).

• The main guarantees for financial operations are time deposits, margin calls and promissory notes for derivative operations.

Liquidity riskThis is the risk that a company encounters difficulties in obtaining funds to meet financial commitments and as a result incurs losses.

The ability of the Bank and its subsidiaries to honor each one of their current and future commitments depends on appropriate liquidity management and other factors, where the definition of clear and objective liquidity policies, and correct measurement and monitoring are fundamental pillars.

This is the reason why Banco Consorcio has approved, established and implemented a liquidity management policy, for local and foreign currency. The policy is consistent with the fulfillments and obligations generated by the bank’s operations and is in accordance with current legal and regulatory requirements.

This liquidity management policy covers normal scenarios and contingency scenarios.

It is important for a financial institution to exercise prudent management over its liquidity, as any breach in its commitments does not just affect the institution’s income and capital, but also its reputation. There are four areas of Liquidity Risk:

Daily liquidity risk This risk arises from the inability to meet short-term cash requirements necessary for the bank’s operations. To mitigate this risk, there are defined maximum levels of daily and retained cash deficits according to the ability to raise funds, and defined stock levels for liquid assets and/or appropriate available resources that ensure compliance with immediate commitments.

Financing or structural liquidity risk. This risk arises from the inability of the bank and its subsidiaries to meet its payment commitments as they fall due, although they can be met at a future date, or that to meet them would require calling on funds through solutions that would result in lost equity. This risk arises from undetected mismatches between the maturities of assets and liabilities. The risk of structural liquidity is the most important risk faced by Banco Consorcio and its subsidiaries due to the need to finance the projected growth of loans granted and the fulfillment of third party commitments.

To mitigate this risk, there are defined maximum mismatch limits and liquidity indicators, which are monitored daily.

Trading Liquidity Risk. This risk arises from concentration within the non-liquid asset portfolio, which may impede rapid sales when facing immediate commitments. The proportion of the investment portfolio represented by liquid fixed-income instruments is crucial, such as those issued by the Central Bank of Chile, the State, and established banks in Chile, where a broad secondary market exists or which can be sold with repurchase agreements.

To mitigate this risk, the Bank defines liquidity indicators which are monitored and controlled.

Market liquidity risk. This risk arises from the inability to liquidate a position without causing a downward correction in the price or the inability to sell due to scarce demand in the market.

The major sources of these risks are regional or global crises, or internal crises within Chile due to political or economic events, natural disasters, etc.

Estrategias de administración del riesgo de liquidez a) Financing Policies The financing policies of Banco Consorcio and subsidiaries define how the various sources of available financing are managed. This policy incorporates the bank’s overall business strategy, its financial position by currency and maturity, and prevailing market conditions. The business of Banco Consorcio is focused on financing businesses and individuals through consumer, commercial and mortgage loans, whilst investing in debt instruments.

To achieve an adequate management of funding sources the policy defined establishes the following:

• Constant measurement of liquidity positions using liquidity indicators and monitoring liquidity zones.

• Diversifying funding sources through concentration limits for maturity on liabilities by counterpart and concentration limits for remaining terms.

• Establishing minimum levels of liquid and semi-liquid assets.

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b) Diversification policies The diversification policy of Banco Consorcio defines the approved sources of funding and maximum concentrations in each. This policy incorporates the Bank’s overall business strategy, its financial position by currency and maturity, and prevailing market conditions.

The bank mainly uses wholesale financing sources, with a high content of institutional investors. Therefore, the correct balance between stable and volatile financing sources is crucial, based on the business of the Bank and its subsidiaries.

To manage this policy the bank undertakes the following tasks:

• Monitoring and control of concentration indicators for liquid assets and volatile liabilities.

• Monitoring and concentration limits for deposits by counterpart and maturity.

• Controlling maximum concentration limits for liabilities.

c) Investment Policies

The investment policy defines the optimal combination for investing available resources, which are described in the Investment Manual issued by the Assets and Liabilities Committee (CAPA). The lending policy is defined in the Credit Risk Manual, which is monitored by the Portfolio, Collection and Credit Risk Committee. The liquidity of investments in financial instruments is important, i.e. the ease with which they can be transformed into cash in the short term without a significant loss in value. Lending policy focuses on being able to recover loans.

Liquid instruments are defined as documents issued by the Central Bank of Chile, the General Treasury of the Republic of Chile and established banks in Chile, all of which have a broad secondary market. Lending policy also addresses the breakdown of the portfolio, and its criteria are reflected in Banco Consorcio’s credit portfolio.

Measurement of Liquidity risk. Banco Consorcio uses various tools to measure and monitor liquidity risk, distinguishing between normal market situations and stress scenarios.

Normal scenarios are monitored using projected cash flows, identifying reasons for the concentration of liabilities by maturity and by counterpart, as well as identifying the reasons for liquidity, mainly to indicate the relative position of the bank with respect to liquid assets and volatile liabilities.

Stress scenarios are monitored by stress testing liquidity on a monthly basis, where the ability of the bank to withstand extremely illiquid situations is evaluated, whether triggered by internal causes within the bank or a crisis in the financial system.

In addition to the above, there are early warning indicators monitoring the evolution of internal funding sources, and financial system indicators, which are decisive variables to trigger contingency plans to meet liquidity risks.

Market risk Risk is defined as that the fair value or future cash flows of a financial instrument could fluctuate as a result of variations in market prices.

The management of market risks is a management pillar in any financial institution. Therefore, an essential aspect of managing market risk is the bank’s ability to anticipate how these variables affect the prices of financial instruments. For this reason, it is necessary that those who manage and control the risks involved study the market, learn how to read market expectations, and understand which aspects affect it from a fundamental point of view. Furthermore, support can be found in the use of statistical models that involve trend analysis of variables and market prices, which are especially useful for those who are responsible for managing positions.

However, risk management not only requires the analysis of technical and fundamental variables within markets, but also a proper control process must be defined.

The first step within the control process is to identify the risks to which the Bank is exposed, and visualize a strategy to manage them.

The second step within the control process is to establish the models and mechanisms for measuring risks, which must have a solid foundation based on theoretical and practical aspects.

Subsequently, risk exposure limits must be defined in such a way that the risks assumed fall within the policies and tolerances established by senior management.

Finally, an appropriate structure must be defined to ensure that exposure is controlled by opposing interests and their comparison to approved limits.

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A. Trading risks Market risks that impact trading activities arise from variations in market prices that may adversely affect the value of financial instrument positions held by the finance department through foreign exchange operations. These transactions take place in order either to exploit arbitrage opportunities due to the misalignment of prices when the market is taking positions, or to accrue income through the acquisition of fixed income instruments.

Interest rate risk The interest rate risk for trading activities is essentially reduced to the potential negative impact of interest rate variations on the value of financial instruments. The basic methodology for estimating the fair value of a financial instrument that generates a series of future cash flows is through its net present value, using interest rates that are relevant to that instrument and to the market where the Bank operates. Therefore, a rise in market interest rates negatively impacts the value of a financial asset, while the opposite occurs for a financial liability valued at fair value.

Currency riskThe currency risk for trading activities is the possibility of equity loss resulting from an adverse change in the price of one or more foreign currencies. This risk arises on long-term or short-term net spot positions held in foreign currencies or financial instruments denominated in foreign currencies which are traded through foreign exchange operations. This risk also impacts currency derivatives, such as forwards, futures, cross-currency swaps, options, etc.

Indexation riskThe indexation risk arises on differences between expected and actual inflation rates, which affect the net operating income of the Bank on indexation adjustments. This risk arises on trading activities when unexpected adverse movements in inflation rates cause a loss in value on financial asset positions held that are indexed to the UF. It also impacts the indexation adjustments receivable or payable on fixed income instruments. Furthermore, unexpected variations in the CPI may cause adverse effects on the market value of UF derivatives, such as inflation insurance and UF rate swaps.

B. Traditional Banking RisksTraditional banking activities include those where assets and liabilities are not valued according to market value but according to amortized cost, such as commercial loans and deposits. Here the market risks are primarily due to mismatches between assets and liabilities both in amount and in maturity.

Interest Rate RiskThe interest rate risk arises due to a mismatch in maturities between assets and liabilities, namely when liabilities must be renewed at higher rates than those of the corresponding assets, or assets are rearranged at lower rates, thereby affecting the bank’s financial margin.

Currency RiskSimilarly, the currency risk for traditional banking activities arises from the mismatch between assets and liabilities denominated in the same currency. Therefore, this risk depends on the currency composition of assets and liabilities in its financial position statement.

Indexation RiskThe indexation risk has similar features to currency risk. Nevertheless, there is a direct impact on net income as a result of indexation adjustments arising either on assets or liabilities denominated in any indexed unit.

C. Measurement of market risk The bank applies Value at Risk (VaR) methodologies and other complementary measures (mismatch of assets and liabilities by currency and by maturity, interest rate sensitivities, etc.) to measure the market risk on its positions. The bank also applies stress tests to estimate losses when facing extreme changes in the structure of interest rates and currency exchange rates. In addition, the bank applies retrospective tests to evaluate the effectiveness of its internal Value at Risk model.

The Value at Risk calculation predicts the maximum loss that could occur based on assumptions or hypotheses regarding the evolution of market conditions. The Board has defined limits to the Value at Risk, and has established a procedure to monitor the measurements.

The VaR is estimated with 99% confidence and shows the potential loss that would result if the current positions remain unchanged during a working day. The model includes positions in fixed-income investments, derivative instruments and foreign currencies, using an historical simulation method. The model provides measurements of the overall currency and interest rate risks, in addition to individual measurements by position. The result is monitored regularly to test the validity of the assumptions, hypotheses and the adequacy of the parameters and risk factors that are used in the VaR calculation.

The Bank has established limits and monitoring mechanisms of market risks measured using the VaR model, separating those potential variations that would directly affect net income and those that would affect equity, such as traded securities and currency positions in the former case, and investments available for sale in the latter.

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Internal AuditThe processes of the bank and its subsidiaries are regularly audited by the control department at Banco Consorcio, which examines the sufficiency of procedures and compliance with these. The results of the review process are discussed with management of the bank and its subsidiaries and reported to the Board and the Audit Committee (COAU). This Committee is composed of two Directors and the Comptroller, while the General Manager and the Corporate Attorney are always invited.

Operational RiskThis is the risk that the Bank may suffer a loss in reputation with legal or regulatory implications, or incur financial losses, arising from system failures, human error, fraud or external events.

The Bank and its subsidiaries recognize that the elimination of all operational risks is impossible, but it has implemented a supervision and control framework to mitigate these risks. The controls include effective segregation of duties, access restrictions, authorization procedures, reconciliations, training, personnel evaluation, and internal audit, whilst adopting best practices and involving all units within the bank.

The bank has defined an Operational Risk Committee and a Technology, Information Security and Continuity Committee. These committees regularly review losses incurred, together with plans to remedy their causes, and the entire management of risks identified in the processes of the Bank and its subsidiaries and any corresponding mitigating measures. They also monitor the control and management of critical suppliers. They evaluate the evidence supporting continuity plans prepared for critical processes, and ensure compliance with current policies on information security.

Prepayment riskThis is the risk of financial loss to the bank if customers choose or request to repay their loans in advance. This risk is particularly important for portfolios of significant long-term loans.

At Banco Consorcio this risk has been reduced as its mortgage lending comprises mutual endorsable mortgages, which are endorsed over an average term of less than 6 months.

Capital RequirementsIn accordance with General Banking Law, the bank must ensure that its effective equity does not fall below 8% of consolidated risk weighted assets net of required allowances, and base capital does not fall below 3% of total consolidated assets net of required allowances. Effective equity is defined as capital and reserves or base capital with the following adjustments:

I. Subordinated bonds are included up to a maximum of 50% of base capital and

II. Goodwill and investments in unconsolidated companies are deducted.

Assets are weighted according to risk categories, where a percentage risk factor is assigned that determines the capital needed to support each of these assets. There are 5 risk categories (0%, 10%, 20%, 60% and 100%).

All derivative instruments not traded on the stock exchange are included within risk assets with a conversion factor on their notional value, which generates their exposure to credit risk (or “credit equivalent”). Contingent assets not included in the financial position statement are also weighted by “credit equivalent”.

More details on risk management at Banco Consorcio can be found in the individual financial statements published on its website.

II. Insurance Companies

The three Chilean group insurance companies are Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., CN Life Compañía de Seguros de Vida S.A., Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. and in this section, they are referred to as the “Companies”.

a) Risk Management StructureIn accordance with their corporate governance code, there is direct involvement in risk management by various bodies and at various levels in the companies.

The Board has charged the Risk Management Committee, which is composed of directors, a consultant and senior executives of the companies, with setting up an Integrated Risk Management System and regularly monitoring its correct application.

The Investment Committee analyzes, defines and approves the main investment strategies within the acceptable risk levels defined by the Board and ensures compliance.

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Senior management at each of the companies make up the Executive Committee, which is responsible for proposing business policies and strategies to the Board and subsequently for their implementation and control. In addition, it is responsible for correct management, protecting the interests of shareholders and other stakeholders.

In particular, it proposes risk management policies for Board approval, and is responsible for their implementation and follow-up Senior management is supported by a number of corporate committees with clearly defined objectives and responsibilities to address specific issues within various areas of the companies. These committees include the participation of one or more members of the executive committee, and those responsible for the relevant areas.

The investment risk department manages and controls the credit and counterpart risks, primarily assessing bond issuers and financially analyzing financial institutions. It also proposes and controls internal limits by issuer and counterpart, and regularly reviews compliance with safeguards and restrictions regarding portfolio securities.

The internal audit department is an independent unit that reports functionally to the corporate audit committee and is responsible for evaluating the effectiveness and compliance with internal control and ethics standards as defined by the companies. The audits conclude by suggesting improvements to internal control processes. Also, it is also responsible for providing the board with a professional opinion that the risk management system is appropriate for the organization, considering the risks to which the business and operations of the companies are exposed.

The risk control department is responsible for proposing and updating policies and procedures relating to the risk management system. It participates in formulating risk management strategy for the companies, initially making proposals to the risk management committee and subsequently to the board for final approval. It supports various business and operational areas in the application of the risk management system, which is common to the entire organization, in order to identify, evaluate, manage and monitor risks in accordance with corporate policies and procedures. It produces a risk matrix for the companies. It develops continuity plans and functionally tests them. It is also responsible for implementing the information security policy. It analyzes, evaluates and monitors financial risks through the design, programming and deployment of mathematical models and key indicators, within the framework of current regulations and the policies of the companies. It prepares reports for submission to the Risk Management Committee.

The Technical and Financial Control Department is responsible for preparing strategic and financial information for the Company. It controls investments and performs actuarial duties. It has specific areas to enable it to meet its objectives.

Each year the Management Planning and Control Department coordinates the preparation of the three-year business plan with all the areas, and is responsible for identifying and explaining monthly variations in actual results with respect to this plan, which are reported to the Board. The Strategic Management Control Department is responsible for coordinating the definition and monitoring of indicators that measure the fulfillment of strategic objectives relating to each of the areas of the companies. It analyzes deviations and proposes corrective action. The Accounting team provide timely, reliable and complete financial information, to support decision-making processes by stakeholder groups and, in particular, prepares financial statements in accordance with current regulations.

The Investment Control Department is responsible for ensuring the reasonableness of valuations and investment portfolio performance (fixed income, variable income, derivatives and covenants). In addition, it performs a detailed monthly analysis to explain any possible variations in investment performance with respect to budget. It regularly monitors compliance with investment policies reported to the Chilean Securities and Insurance Supervisor, and ensures compliance with covenants with respect to the financial debts of the companies.

The Technical Department is responsible for pricing and underwriting risks insured, and controls and monitors the technical risks associated with insurance. It calculates the technical liabilities, assesses the adequacy of reserves, and performs sensitivity analysis on the technical parameters. It follows up pricing parameters and monitors claims performance on the various risks insured. In addition, it performs catastrophic event simulations for specific portfolios. It also proposes and controls the implementation of pricing and underwriting policies for risks, and reinsurance policy.

The compliance officer is responsible for the integral coordination of the specific functions undertaken by management at each of the companies, focusing on the deployment and management of controls, to ensure compliance with standards in all areas and levels of the organization.

Operational management is responsible for the daily management of operations and is actively involved in the management of operational risk. It ensures that the policies, procedures and internal control systems are properly applied, according to the instructions issued by the executive committee, and are effective and sufficient to mitigate operational risks.

b) Principal risks for insurance companiesThe group’s insurance companies have developed various approaches to evaluate and define risk tolerance, as a result of the diversity of risks, in terms of their origin, as their impact on time horizons and characteristics.

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- Market risk.This is the risk of a downturn in the net value of assets and liabilities from movements in market factors, such as equity investment prices, interest rates, property assets and exchange rates. It includes price, mismatch and reinvestment risks, if applicable.

- Credit risk.This is the risk arising from a breach in commitments made by a securities issuer or a counterpart, or a deterioration in their credit rating.

- Liquidity RiskThis is the risk of incurring losses due to the absence of sufficient liquid assets or sources of financing at a reasonable cost to meet payment commitments.

- Technical risk on insurance.This is the risk inherent to the insurance business and may arise on underwriting and pricing policies that result in losses due to insufficient premiums or technical reserves, or to variations in pricing assumptions, or to catastrophic events.

- Operational and technological risk.This is the risk associated with losses arising from inadequate or failed internal processes, human error, systems failures, or external events. They can be caused by fraud, execution errors, unreliable information, negligence, or catastrophic events such as fire or earthquake, etc.

- Legal and regulatory risk.This is the risk arising from a breach in laws or regulations that govern this business. It also includes the risk of adverse regulatory changes.

- Strategic and group risk.This is the risk arising from an inadequate strategy, from faults in the design or implementation of business plans, or from being unable

to adjust to new environmental conditions, or from deterioration in market conditions. This category also includes group risk, which is associated with losses on transactions with related companies, similarly contagion and reputational risks.

c) Risk assessmentThe companies perform regular assessments of their main risks, which are embodied in risk matrices. Various tools are used, such as sensitivity analysis with respect to the most significant risk factors, Value at Risk (VaR) models, asset portfolio studies by instrument, risk rating, maturity, and exposure assessment in foreign currency. Additionally, the life insurance companies monitor the flow match for assets and liabilities, and the “Adequacy of Assets Test (AAT).

The results of these assessments are reported in detail in the separate financial statements published quarterly on the Internet site of the Chilean Securities and Insurance Supervisor.

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NOTE 32 CONTINGENCIES AND COMMITMENTS

COMPAÑÍA DE SEGUROS DE VIDA CONSORCIO NACIONAL DE SEGUROS S.A. Contingencies and commitments as of December 31, 2016 were as follows:

DESCRIPTION CREDITOR NAME

ASSETS COMMITTEDAMOUNT PAYABLEThCh$

COMMITMENT RELEASE DATE

COMMITMENT RELEASE AMOUNT

ThCh$ OBSERVATIONSTYPE

BOOK VALUEThCh$

COLLATERAL ASSETS

INDIRECT LIABILITIES

OThERSCommitment to a property sale Rentas y Desarrollo Aconcagua S.A. Real estate 2,303,488 1,852,528 4/30/2025 2,621,789 Commitment to a property sale Cumbres del Peñón SpA. Real estate 408,993 439,711 4/30/2025 439,711 Commitment to a property sale Inmobiliaria Los Cipreses S.A. Real estate 148,701 148,539 12/31/2025 148,539 Commitment to a property sale Inmobiliaria Socovesa Santiago S.A. Real estate 699,216 699,065 10/3/2021 699,065 Commitment to a property sale Inmobiliaria Socovesa Santiago S.A. Real estate 4,455,428 1,739,011 10/3/2021 4,494,313 Commitment to a property sale Inmobiliaria FCG S.A. Real estate 699,216 - 10/3/2021 699,065 Commitment to a property sale Inmobiliaria FCG S.A. Real estate 4,455,428 - 10/3/2021 4,494,313 Commitment to a property sale Inmobiliaria Socovesa Santiago S.A. Real estate 19,978,181 14,689,533 10/5/2021 20,240,076 Commitment to a property sale Inmobiliaria Altas Cumbres S.A. Real estate 2,107,051 1,476,225 4/30/2019 2,108,892 Commitment to a property sale Inmobiliaria Estrella del Sur Ltda Real estate 8,584,765 - 12/30/2023 8,630,088 Commitment to a property sale Inmobiliaria Nuevo Puente Alto S.A. Real estate 985,286 800,655 1/31/2018 985,452 Commitment to a property sale Rentas RA 4 Ltda. Real estate 1,477,373 1,481,916 5/31/2017 1,481,916 Commitment to a property sale Inmobiliaria Laguna del Sol SpA Real estate 22,706,902 19,650,308 4/30/2024 22,718,478 Contractual commitment Constructora e Inmobiliaria del Parque Dos S.A. - - 3/1/2012 4,556,592 Future Disbursements Contractual commitment Constructora e Inmobiliaria Alonso de Córdova S.A. - 1,520,679 12/30/2016 1,520,679 Future Disbursements Contractual commitment Inmobiliaria Nuevo Puente Alto S.A. - - 3/24/2017 926,421 Future Disbursements Contractual commitment Inmobiliaria Conde del Maule S.A. - - 6/30/2018 1,663,849 Future Disbursements Contractual commitment Inmobiliaria Los Leones S.A. - - 11/6/2017 1,117,154 Future Disbursements Lending commitment Inversiones Mendoza S.A. - 2,521,080 6/30/2016 2,521,080 Future Disbursements Purchase Option Inmobiliaria Muelle Vergara S.A. Shares - 3,029,833 4/28/2016 3,029,833 Future Disbursements Guarantee policy for urbanization works Ilustre Municipalidad de Valparaiso 908,033 35,543 9/1/2017 35,543 GuaranteeGuarantee policy for urbanization works Ilustre Municipalidad de Valparaiso 1,899,524 2,635 1/5/2017 2,635 GuaranteeGuarantee policy for urbanization works Ilustre Municipalidad de Valparaiso - 11,055 7/31/2017 11,055 GuaranteeGuarantee policy for urbanization works Ilustre Municipalidad de Valparaiso - 46,462 7/31/2017 46,462 GuaranteeGuarantee policy for urbanization works Ilustre Municipalidad de Valparaiso - 11,217 7/31/2017 11,217 GuaranteeGuarantee policy for urbanization works Ilustre Municipalidad de Valparaiso - 46,462 7/31/2017 46,462 GuaranteeGuarantee policy for urbanization works Ilustre Municipalidad de Valparaiso - 13,005 7/31/2017 13,005 GuaranteeSale option Geosal S.A. Real estate 5,386,189 5,389,327 12/28/2017 5,389,327 Sale option Geosal S.A. Real estate 540,309 406,002 4/30/2020 541,336 Sale option Rentas y Desarrollo Aconcagua S.A. Real estate 13,173,698 13,337,457 8/30/2022 13,337,457 Sale option Desarrollos Inmobiliarios y Constructora Valle Grande S.A. Real estate 4,124,337 4,352,195 12/31/2030 4,352,195 Sale option Desarrollos Inmobiliarios y Constructora Santo Tomás S.A. Real estate 13,986,676 10,327,989 12/31/2030 10,327,989 Sale option Master SpA. Units - 2,239,578 6/23/2017 2,239,578 Future Disbursements Sale option Master SpA. Units - 2,239,578 6/23/2018 2,239,578 Future Disbursements Lease with purchase option Inmobiliaria Puente Ltda. - 19,855,284 3/31/2039 51,131,364 Future Disbursements Lease with purchase option Inmobiliaria Puente Ltda. - 4,896,983 2/28/2039 17,988,564 Future Disbursements Lease with purchase option MBI SpA. - 52,541,956 11/30/2036 97,766,703 Future Disbursements Guarantee policy in advance of contract commitment

Inmobiliaria Nuevo Puente Alto S.A. - 926,421 5/24/2017 926,421 Guarantee

Guarantee policy in advance of contract commitment

Inmobiliaria Los Leones S.A. - 1,117,154 1/6/2018 1,117,154 Guarantee

Guarantee policy in advance of contract commitment

Inmobiliaria Conde del Maule S.A. - 1,663,849 8/30/2018 1,663,849 Guarantee

The Company is processing the registration of plot no. 24 of the Vilana Estate, also known as ML B24, in the Santiago Real Estate Registry, which Inmobiliaria Valle Grande Ltda. sold to the Company, due to the existence of a precautionary measure over the property rights. At the close of these financial statements a provision was made for this item, which is reported under the heading investment provisions for ThCh$ 297,328.

At the close of these financial statements there were no other guarantees, contingencies or commitments due from the Company.

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CN LIFE COMPAÑÍA DE SEGUROS DE VIDA S.A.

DESCRIPTION CREDITOR NAME

ASSETS COMMITTEDAMOUNT PAYABLEThCh$

COMMITMENT RELEASE DATE

COMMITMENT RELEASE AMOUNT

ThCh$ OBSERVATIONSTYPE

BOOK VALUEThCh$

COLLATERAL ASSETS

INDIRECT LIABILITIES

OThERS

Commitment to a property sale Geosal S.A. Real Estate 1,624,643 1,630,148 7/31/2023 1,630,148Commitment to a property sale Inmobiliaria Los Cipreses S.A. Real Estate 6,775,818 4,531,420 12/31/2025 6,687,060Commitment to a property sale Inmobiliaria AIVSE S.A. Real Estate 6,687,717 2,305,448 2/28/2023 6,692,387Sale option Geosal S.A. Real Estate 1,069,470 785,876 4/27/2020 1,068,328Sale option Geosal S.A. Real Estate 3,701,210 3,700,850 4/30/2025 3,700,850Sale option El Peñón SpA. Real Estate 2,947,371 4,609,238 4/30/2025 4,663,411Sale option Cumbres del Peñón SpA. Real Estate 4,663,916 2,917,776 4/30/2025 2,947,083Lease with purchase option Concreces Leasing Habitacional S.A. - 455,665 8/31/2016 10,539,192Unidad Leasing Habitacional S.A. Unidad Leasing Habitacional S.A. - 2,635,772 12/31/2016 7,904,394

BANCO CONSORCIO AND SUBSIDIARIES

a) Commitments and responsibilities recorded in memorandum accounts

The Bank and its subsidiaries record in off-balance-sheet memorandum accounts the following balances related to business commitments and responsibilities:

12-31-2016MCh$

12-31-2015MCh$

SECURITIES CUSTODYSecurities in the bank's custody 2,597,092 1,883,697Securities in CCB custody 592,166 561,309COMMITMENTSLoans approved but not released 13,297 13,392Other loan commitments - 9,326TOTAL 3,202,555 2,467,724

b) Loans and contingent liabilities

The bank acquired several irrevocable commitments and contingent liabilities to meet the needs of customers, and although these obligations could not be recognized in the financial position statement, they contain credit risks and are therefore part of the overall risk of the bank.

The following table shows the contractual amounts of operations that require the bank to provide loans, and the allowances established by the credit risk thereon:

12-31-2016MCh$

12-31-2015MCh$

Performance and bid bonds 50,933 48,570Corresponding provisions (1,324) (786)TOTAL 49,609 47,784

Guarantees received

12-31-2016

MCh$12-31-2015

MCh$Guarantees received 1,436,923 1,150,099 TOTAL 1,436,923 1,150,099

BANCO CONSORCIO SUBSIDIARY, CONSORCIO CORREDORES DE BOLSA S.A.a. Direct Commitments: As at December 31, 2016 and 2015 there were no direct commitments or guarantees.

b. Collateral: As of December 31, 2016 and 2015 there were no guarantees over assets creating third party obligations.

c. Legal Actions: As of December 31, 2016 and 2015 there were no pending legal matters against the company.

d. Custody of securities: Consorcio Corredores de Bolsa S.A. has chosen an annual review of its processes and controls associated with the custody of securities to be performed by external auditors registered with the Chilean Securities and Insurance Supervisor, to comply with Circular 1962 issued by the Chilean Securities and Insurance Supervisor.

211

December 31, 2016

CUSTODY FOR NON-RELATED ThIRD PARTIES

NATIONAL FOREIGN

TOTALThCh$

VARIABLE INCOME

INVESTMENTSThCh$

FIXED INCOME INVESTMENTS

ThCh$OThERSThCh$

VARIABLE INCOME

INVESTMENTSThCh$


ThCh$OThERSThCh$

Custody without asset management 329,748,288 204,360,056 - - - - 534,108,344

Portfolio management - - - - - - -

Management of voluntary retirement savings - - - - - - -

TOTAL 329,748,288 204,360,056 - - - - 534,108,344Percentage of custody with D.C.V. (%) 62,89% 99,95% 0,00% 0,00% 0,00% 0,00% 77,07%

Percentage of custody with Issuers/Physical 0,01% 0,05%

Percentage of custody with others 37,10% 0,0%

CUSTODY FOR RELATED ThIRD PARTIES

NATIONAL FOREIGN

TOTALThCh$

VARIABLE INCOME

INVESTMENTSThCh$


ThCh$OThERSThCh$

VARIABLE INCOME

INVESTMENTSThCh$


ThCh$OThERSThCh$

Custody without asset management 47,430,083 627,168 - - - - 48,057,251

Portfolio management - - - - - - -

Management of voluntary retirement savings - - - - - - -

TOTAL 47.430.083 627.168 - - - - 48.057.251Percentage of custody with D.C.V. (%) 98.99% 100.0% 0.0% 0.0% 0.0% 0.0% 99.01%

Percentage of custody with Issuers/Physical 0.00% 0.0%

Percentage of custody with others 1.01% 0.0%

December 31, 2015

CUSTODY FOR NON-RELATED ThIRD PARTIES

NATIONAL FOREIGN

TOTALThCh$

VARIABLE INCOME

INVESTMENTSThCh$


ThCh$OThERSThCh$

VARIABLE INCOME

INVESTMENTSThCh$


ThCh$OThERSThCh$

Custody without asset management 285,324,365 231,966,619 - - - - 517,290,984Portfolio management - - - - - - -Management of voluntary retirement savings - - - - - - -TOTAL 285.324.365 231.966.619 - - - - 517.290.984Percentage of custody with D.C.V. (%) 60.35% 100.00% 0.00% 0.00% 0.00% 0.00% 78.13%Percentage of custody with Issuers/Physical 0.21% 0.0%Percentage of custody with others 39.44% 0.0%

CUSTODY FOR RELATED ThIRD PARTIES

NATIONAL FOREIGN

TOTALThCh$

VARIABLE INCOME

INVESTMENTSThCh$


ThCh$OThERSThCh$

VARIABLE INCOME

INVESTMENTSThCh$


ThCh$OThERSThCh$

Custody without asset management 42,684,419 1,333,605 - - - - 44,018,024Portfolio management - - - - - - -Management of voluntary retirement savings - - - - - - -TOTAL 42.684.419 1.333.605 - - - 44.018.024Percentage of custody with D.C.V. (%) 99.49% 100.0% 0.0% 0.0% 0.0% 0.0% 99.51%Percentage of custody with Issuers/Physical 0.00% 0.0%Percentage of custody with others 0.51% 0.0%

e. Personal guarantees: As of December 31, 2016, and December 31, 2015, the Company has not granted any personal guarantees.

f. Operational guarantees: The Company has taken out an insurance policy to ensure the correct and full compliance of all its obligations as a stockbroker to the benefit of the present or future creditors of Consorcio Corredores de Bolsa S.A., represented by the Santiago Stock Exchange and the Chilean Electronic Stock Exchange, in order to comply with the provisions of Articles 30 and 31 of Law No. 18,045 (Stock Market Law). This guarantee is for UF 20,000. The policy was taken out with the Compañía de Seguros Generales Consorcio Nacional de Seguros S.A., and it expires on April 22, 2017.

In addition, a policy has been taken out to ensure the correct and full compliance of all its obligations when managing the resources of third-parties to the benefit of savings plans depositors, and the payment of compensation for any damages caused by its failure, in accordance with the plan and the standards in Article 31 of the above-mentioned act. This policy is for UF 10,000 and was taken out with the Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. and it expires on November 1, 2017.

In order to comply with the Chilean Commodities Exchange instructions, all stock brokers registered with the Santiago Stock Exchange have been instructed to take out an insurance policy to cover any potential irregularities caused by a lack of loyalty from their employees. The company’s policy amounts to US$ 1 million and was taken out with the Compañía de Seguros Generales Consorcio Nacional de Seguros S.A., and it expires on April 15, 2017.

There are equity instruments held in custody by the Electronic Stock Exchange for ThCh$ 1,455.808, which are shares that the Broker bought under a commitment to sell them at term, and that according to the rules of the Stock Exchanges can guarantee these simultaneous transactions. The final value is ThCh$ 1,766,419 as of December 31, 2016.

There are guarantees deposited at the Santiago Stock Exchange to ensure compliance with the obligations incurred or arising from compensation due to CCLV Contraparte Central S.A. (Chilean Central Clearing house). The guarantee as of December 31, 2016 comprised of fixed income instruments valued by the Santiago Stock Exchange at ThCh$ 1,192,597 and valued in the Broker’s accounts at fair value of ThCh$ 1,854,950.

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NOTE 33 - PROTECTION REGULATION FOR BOND hOLDERS: BORROWING LEVEL (APPLICABLE TO ThE BANK AND SUBSIDIARIES).

LIABILITIES12-31-2016

ThCh$12-31-2015

ThCh$Other financial liabilities, current 2,078,568,676 1,979,348,577Trade and other payables 20,299,189 14,449,468Other short-term provisions 1,626,630 1,108,645Current tax liabilities 1,161,291 1,271,766Employee benefit provisions, current 2,567,226 2,170,992Other non-financial liabilities, current 35,558,766 38,669,599Total current liabilities other than liabilities in asset groups available for sale 2,139,781,778 2,037,019,047Liabilities in asset groups available for saleTOTAL CURRENT LIABILITIES 2,139,781,778 2,037,019,047

NON-CURRENT LIABILITIESOther financial liabilities, non-current 698,097,534 372,082,587Deferred tax liabilities 12,915,610 10,944,840TOTAL NON-CURRENT LIABILITIES 711,013,144 383,027,427


EQUITYShare capital 356,571,629 291,875,811Retained earnings 33,285,424 19,192,842Other reserves (3,717,638) (25,183,102)TOTAL ShAREhOLDER'S EQUITY 386,139,415 285,885,551

TOTAL LIABILITIES AND EQUITY 3,236,934,337 2,705,932,025


TOTAL NET EQUITY 386,139,415 285,885,551

LEVERAGE AT DECEMBER 31, 2016 (TOTAL LIABILITIES / TOTAL EQUITY) 7.38 8.47

RESTRICTIONS

General bond characteristics:

Bonds that were charged to a line were placed in the local market and issued as dematerialized bonds pursuant to Article 11 of DCV Law.

Early Redemption:

The issuer may not redeem in advance all or part of these bonds of any series or subseries issued under the line and agreed in writing.

The values that are reported in the financial position statement at the closing date of the Financial Statements are calculated on the basis of a duly authorized progress table using a bullet formula.

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NOTE 34 - MATERIAL EVENTS

CONSORCIO FINANCIERO S.A.- On September 28, 2016, in compliance with Article 10 second paragraph of Law 18,045 governing the Stock Market, in General Regulation

30, and complementing the information reported as a material event on June 30, 2016, Consorcio Financiero S.A. is duly empowered to report as a material event that International Finance Corporation and Calverton Spain S.L. have met the deadline set by the Extraordinary Shareholders’ Meeting held on June 11, 2016 and have subscribed and paid for a total of 11,281,063 shares, pursuant to the first paragraph of Article 24 of Corporate Law. Therefore, the company’s share capital is now Ch$ 288,141,592,306 divided into 136,952,063 shares, all fully subscribed and paid by the shareholders prior to this date.

In compliance with Article 56 of the Regulations governing Corporations, a Board meeting on this date agreed to record this event in a public deed, which is being recorded in the margins of the Company’s registration in the Trade Register of the Santiago Property Register.

- On July 27, 2016, in accordance with Section 11 of General Regulation 30 issued by the Superintendent, and Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market, I hereby report the following:

• At a Board meeting today, the Board was informed of resignations from the position of Director submitted by Mr. Juan Diego del Rio Montt and Mr. Pedro Felipe Iñiguez Ducci dated July 26, 2016.

• Messrs. Ramiro Mendoza Zuñiga and Sergio Restrepo Isaza were appointed as Directors to fill these vacancies, by the unanimous vote of those present. The recently appointed Directors will fulfill their duties until the next Ordinary Shareholders’ Meeting, at which time a new Board will be reelected, in accordance with the second paragraph of Article 32 of Law 18.046 governing Corporations.

• As a result, until the next Ordinary Shareholders’ Meeting the Company’s Board shall be composed of Messrs. Marcos Buchi Buc, Chairman, Hernán Büchi Buc, Eduardo Fernández León, José Antonio Garcés Silva, Juan Hurtado Vicuña, Pedro Hurtado Vicuna, Juan José Mac Auliffe Granello, Ramiro Mendoza Zuñiga and Sergio Restrepo Isaza.

- - On July 15, 2016, in accordance with Law 18,045 governing the Stock Market and General Regulation 30 issued by the Superintendent, at an Extraordinary Shareholders’ Meeting of our subsidiary Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., dated June 7, 2016, it was agreed to increase the share capital by Ch$ 55,000,000,000 by issuing 20,213,157 new single series shares at a price of Ch$ 2,720.99999025.

On this same date, Consorcio Financiero S.A. subscribed and paid Ch$ 47,000.001,534 for 17,273,062 shares, during the preferential subscription period.

- On July 14, 2016, in accordance with Law 18,045 governing the Stock Market and General Regulation 30 issued by Superintendent, I am duly empowered to hereby report that an Extraordinary Shareholders’ Meeting of our subsidiary Banco Consorcio was held on this date and representatives of all shareholders were present. The meeting unanimously agreed to increase its share capital by Ch$ 47,000 million by issuing 22,523 shares, and on the same date these shares were fully subscribed and paid for by Consorcio Financiero S.A.

- On July 13, 2016, in accordance with the second paragraph of Article 10 of Law 18,045 governing the Stock Market and General Regulation 30, I am duly empowered to hereby report that on July 12, 2016, the Company exercised its preferential right to subscribe for 296,090,278 shares issued by Almendral S.A., which is part of a controlling agreement, by paying Ch$ 10,836.904,175. This subscription represents the Company’s entire preferential right.

The share capital increase at Almendral S.A. was approved at an Extraordinary Shareholders’ Meeting held on May 20, 2016, and recorded in a public deed with the same date, at the Santiago Notary Mr. Patricio Raby Benavente. This meeting agreed to increase the share capital of that company by up to Ch$175,000 million by issuing up to 4,700 million shares, which was duly approved by the Chilean Securities and Insurance Supervisor.

Furthermore, without prejudice to the Company’s habitual transactions policy, I hereby report that on this date the Company completed the following transactions with subsidiaries, in order to reassign its investment assets:

• It sold to Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. 193,659,000 shares in Almendral S.A. for Ch$ 7,843,189,500 through a sale arranged by the Santiago Stock Exchange.

• It sold to CN Life Compañía de Seguros de Vida S.A. 102,431,278 shares in Almendral S.A. for Ch$ 4,148,466,759 through a sale arranged by the Santiago Stock Exchange.

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- On June 30, 2016, in accordance with the second paragraph of Article 10 of Law 18,045 governing the Stock Market and General Regulation 30, I am duly empowered to hereby report the following, which complements the information reported in the Material Events dated March 31, May 27, and June 14, all of 2016:

• On June 29, 2016, International Finance Corporation (“IFC”) and Calverton Spain S.L. (“Calverton”), which belongs to the FIG Fund, which is managed by the IFC Asset Management Company, became shareholders of Consorcio by subscribing and paying for 11,281,063 shares, which were issued under the capital increase agreed by the Company at an Extraordinary Shareholders’ Meeting held on June 11, 2016, and the remaining shareholders had waived and assigned their corresponding preferential rights.

• The subscription price was Ch$ 8,313.33 per share, settled by a cash payment of Ch$ 93,783.200,000, equivalent to US$ 140,000,000 at the observed exchange rate published on June 24, as agreed in the contract dated May 27, 2016.

• IFC subscribed 8,057,902 shares, by paying Ch$ 66,988.000,000, and Calverton subscribed 3,223,161 shares, by paying Ch$ 26,795.200,000, so that when the period set by the Shareholders expires, this shall be the number of subscribed and paid shares.

• These funds will be used to subscribe and pay for capital increases in Consorcio Financiero S.A.’s two main subsidiaries, which are Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. and Banco Consorcio, which should be completed during the next 60 days.

• As a result of these share subscriptions, the shareholders of Consorcio Financiero S.A. as of this date are the following:

ShARES %Banvida S.A. 57,551,628 42.02%P&S S.A. 57,551,628 42.02%IFC and Calverton 11,281,063 8.24%BP S.A. 7,677,553 5.61%FIP El Bosque and FIP Tobalaba 2,890,191 2.11%

136,952,063 100.00%

- On June 28, 2016, in accordance with the second paragraph of Article 10 of Law 18,045 governing the Stock Market and General Regulation 30, I am duly empowered to report that on June 23 Consorcio Financiero S.A. signed a contract commitment and forward contract with its subsidiary Banco Consorcio for US$ 140,000,000 to be settled on June 29, 2016.

- The purpose is to make available the necessary funds so that the International Finance Corporation and Calverton Spain S.L. can purchase shares in Consorcio, through its capital increase and under the terms indicated in the contracts signed to that effect that were duly reported to the market and the Superintendent.

- On June 20, 2016, in accordance with Section 11 of General Regulation 30 issued by the Superintendent, and Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market, I hereby report that the Board unanimously agreed to appoint Mr. Marcos Buchi Buc as Chairman of the Board.

- Accordingly, the Company’s Board of Directors is composed of Messrs. Marcos Buchi Buc, Chairman, Hernán Büchi Buc, Eduardo Fernández León, José Antonio Garcés Silva, Juan Hurtado Vicuña, Pedro Hurtado Vicuna, Juan José Mac Auliffe Granello, Juan Diego del Rio Montt and Pedro Felipe Iñiguez Ducci.

- On June 14, 2016, in accordance with the second paragraph of Article 10 of Law 18,045 governing the Stock Market and General Regulation 30, I am duly empowered to hereby report that an Extraordinary Shareholders’ Meeting was held on June 11, 20I6, and by the unanimous vote of those present it agreed the following, which complements the information reported in the Material Event dated May 27, 2016:

• Increase the share capital by Ch$ 109,999,995,674, through issuing 13,231,761 new shares at a unit price of Ch$ 8,313.33.

• Begin a period for the Company’s current shareholders to decide whether to exercise their preferential rights to these shares, in accordance with Article 25 of Corporation Law and its corresponding Regulations.

• Empower the Board to make the necessary arrangements to issue these shares under the terms established by the meeting.

• Increase the number of Company Directors from 7 to 9.

• Revoke the current Board and appoint new members as follows: Marcos Buchi Buc, Hernán Büchi Buc, Eduardo Fernández León, José Antonio Garcés Silva, Juan Hurtado Vicuña, Pedro Hurtado Vicuna, Juan José Mac Auliffe Granello, Juan Diego del Rio Montt and Pedro Felipe Iñiguez Ducci.

• Amend the Fifth, Seventh and First Transitional Articles of the bylaws, in order to reflect this increase in share capital and number of Directors.

215

- On May 27, 2016, in accordance with the second paragraph of Article 10 of Law 18,045 governing the Stock Market and General Regulation 30, I am duly empowered to hereby report as a Material Event that an Ordinary General Shareholders Meeting was held on May 25, 2016 and agreed the following, which complements the information reported in the Material Event reported on March 31, 2016:

• On this date, the Company and its shareholders P&S S.A., Banvida S.A. and BP S.A., signed final agreements with International Finance Corporation and Calverton Spain S.L (collectively “IFC”), which complete the process whereby IFC become shareholders of Consorcio through a capital increase; and

• Subject to signing these contracts with IFC, an Extraordinary Shareholders’ Meeting was convened for June 11, 2016, at 10:00am, at the Company’s registered address, at El Bosque 180, Floor 3. Its purpose will be to approve a proposal to increase the share capital by Ch$ 110,000 million and increase the number of Directors to nine. The Company has received confirmation that all the shareholders intend to attend this meeting and vote in favor of the proposal. The shareholders of Consorcio have also confirmed their intention to waive and assign their preferential subscription rights, to allow IFC to subscribe for these new shares.

The contracts referred to set out the detailed conditions for IFC’s subscription and payment of the share capital increase equivalent to US$ 140 million, at a price per share of Ch$ 8,313.33, which represents 1.5 times book value as of December 31, 2015, adjusted for dividends. As a result of this subscription, IFC will acquire approximately 8.5% of the Company after the capital increase.

Furthermore, IFC and the Company shareholders indicated above have signed an agreement that will allow IFC to elect a Director, who will also become a member of the Audit Committee, as well as establishing other rights as minority shareholders.

The funds received under this capital increase will be used to subscribe and pay for capital increases of US$ 70 million in the Company’s two main subsidiaries, which are Consorcio Seguros de Vida and Banco Consorcio, to enable them to continue with their plans to develop, strengthen and grow their businesses.

The capital increase under the terms in these contracts is subject to compliance with the usual conditions for such transactions and we expect that subscription and payment will take place within the next 60 days.

- On April 27, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market, I hereby report as a Material Event that an Ordinary Shareholders’ Meeting of Consorcio Financiero S.A. was held on April 26, 2016, at 4:00pm. All the shareholders entitled to vote attended this meeting and they unanimously agreed the following:

• Approve the Annual Report, Tax Accounts, Financial Statements and the External Auditors’ Report for 2015.

• Approve the dividend policy for 2016.

• Approve a final dividend of Ch$ 350.86 per share, paid from net income for 2015. This dividend will be paid on May 6, 2016 to shareholders recorded in the shareholders register on the fifth working day prior to this date.

• Approve the Board remuneration policy for 2016.

• Appoint PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada as external auditors for 2016.

• Approve the transactions with related parties report for 2015.

• Select the newspaper El Diario Financiero to publish the announcement of shareholders’ meetings and other notices.

• Appoint Feller Rate Clasificadora de Riesgo Limitada and Fitch Chile Clasificadora de Riesgo Limitada as raters of publicly offered securities issued by the Company.

- On March 31, 2016, in accordance with Articles 9 and 10 of Law 18,045 governing the Stock Market, I hereby report to the Chilean Securities and Insurance Supervisor, as a Material Event that a Board Meeting of Consorcio Financiero S.A. was held on March 30, 2016, where the Board, together with the controlling shareholders P&S S.A. and Banvida S.A. agreed a “Term Sheet for IFC and IFC Financial Institutions Growth Fund, LP Proposed Equity Investment” with the International Finance Corporation.

This agreement sets out the general terms and conditions of the proposal made by IFC, to subscribe and pay for a capital increase in Consorcio Financiero S.A. of US$ 140 million at a price per share equal to 1.5 times book value, which will allow IFC to acquire approximately 8.3% of the Company. This capital increase will be mainly used to subscribe and pay for capital increases of US$ 70 million in each of Consorcio Financiero S.A.’s principal subsidiaries. These are Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. and Banco Consorcio, to enable them to continue with their plans to develop, strengthen and grow their businesses.

The completion of the transaction under the terms of this agreement is subject to the usual regulatory and company approvals for such transactions, and the approvals required for IFC and the Agreement, and execution of the transaction documents in terms satisfactory to the parties, which we believe will take approximately ninety days.

BANCO CONSORCIO- Banco Consorcio held an Extraordinary Shareholders’ Meeting on July 14, 2016, which agreed to increase its share capital by Ch$ 47,000

million, by issuing 22,523 shares, at a price equivalent to UF 80, which were fully subscribed and paid for by Consorcio Financiero S.A. on the same date.

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- Banco Consorcio signed a forward contract with Consorcio Financiero S.A. on June 23, 2016 for US$ 140 million that will be settled on June 29, 2016. The purpose of this contract is to convert and settle in Chilean pesos the capital increase that will be subscribed by the International Finance Corporation and FIF Fund in order to become a shareholder of Consorcio Financiero S.A.

- Banco Consorcio held an Ordinary General Shareholders’ Meeting on April 4, 2016, which was attended by all the shareholders. This meeting agreed the following:

• Banco Consorcio held an Ordinary General Shareholders’ Meeting on April 4, 2016, which was attended by all the shareholders. This meeting agreed the following:

• Received the Management report and approved the Tax Accounts, the Financial Statements and notes, and the Annual Report for 2015.

• Received and approved the External Auditors’ report without any observations.

• Received a report regarding the Material Events, the communications with the SBIF and the transactions with related parties during 2015.

• Received the Audit Committee’s annual report.

• Unanimously approved to distribute a dividend of Ch$ 17,695,818,102, which represents 50% of net income for 2015.

• Approved retaining the remainder of net income for the previous year.

• Appointed PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada as External Auditors for 2016.

• Appoint Feller Rate Clasificadora de Riesgo Limitada and International Credit Rating Compañía Clasificadora de Riesgo Limitada as risk raters.

• Approved the Director’s remuneration for the year, which will be UF 70 monthly for attending Board meetings, and authorized the Board to approve the remuneration of the Directors that serve on the Audit Committee.

• Select the newspaper “El Pulso” for publishing relevant company notices.

This meeting was immediately followed by an Extraordinary Shareholders’ Meeting, which was attended by all shareholders and the following was unanimously agreed:

• Increase the Bank’s share capital by Ch$ 17,695,818,103, by issuing 8,556 shares with no par value, at a referential unit price of UF 80, fully paid, and charged to distributable net income for 2015, which were distributed among the shareholders at a rate of 0.05348 new shares for each share currently held.

• Amend the Fifth and First Transitory Articles of the Company’s bylaws, in order to accommodate the aforementioned capital increase, which will be submitted to the Chilean Superintendent of Banks and Financial Institutions, in accordance with Article 31 of General Banking Law, to issue a certificate that must be registered and published.

- Consorcio Corredores de Bolsa S.A. held an Extraordinary Board Meeting on March 14, 2016, which received the resignation for personal reasons of the CEO Mr. Martin Hurtado Menéndez, and appointed Mr. José Francisco Perez Ojeda to replace him as legal representative and CEO with effect from April 4, 2016. It also revoked the authority of Mr. Martin Hurtado from April 1 and the same authority was granted to Mr. Pérez from the same date.

- The CEO of Consorcio Corredores de Bolsa S.A. submitted his resignation as CEO on March 4, 2016 for personal reasons, which will be effective from April 4, 2016.

CN LIFE COMPAÑÍA DE SEGUROS DE VIDA S.A.- On July 13, 2016, the Company bought from Consorcio Financiero S.A. 102,431,278 shares in Almendral S.A. for Ch$ 4,148,466,759 through

a sale arranged by Santiago Stock Exchange. This transaction fell within the Company’s habitual transactions policy.

- On June 24, 2016, in accordance with paragraph 2 of Article 147 of Law 18,046, it was reported to the Chilean Securities and Insurance Supervisor that at a Board Meeting held on June 22, 2016, it was agreed to update the Company’s General Habitual Transaction Policy, since the current version had been approved at a Board Meeting on February 26, 2010.

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- On April 28, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18045 governing the Stock Market and other applicable legislation, the Superintendent was informed that a Board Meeting was held on April 27, 2016, where it was agreed to appoint Mr. Marcos Buchi Buc as Chairman of the Board of Directors of CN Life Compañía de Seguros de Vida S.A. for a period of three years.

- On April 27, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18045 governing the Stock Market, it was reported as a Material Event that an Ordinary Shareholders’ Meeting of CN Life Compañía de Seguros de Vida S.A. was held on April 26, 2016, at 1:00pm. All the shareholders entitled to vote attended this meeting and they unanimously agreed the following:




• Appoint the following Directors for a new three-year period: Marcos Büchi Buc, Eduardo Fernández León, José Antonio Garcés Silva, Juan Hurtado Vicuña, Pedro Hurtado Vicuña, Juan José Mac-Auliffe Granello and Felipe Silva Méndez.



• Appoint Fitch Chile Clasificadora de Riesgo Limitada and Feller & Rate Clasificadora de Riesgo as risk raters.



COMPAÑÍA DE SEGUROS DE VIDA CONSORCIO NACIONAL DE SEGUROS S.A.- On November 24, 2016, in accordance with Articles 9 and 10 of Law 18,045 governing the Stock Market and other applicable regulations, it

was reported as a Material Event that a Board Meeting of Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. was held on November 23, 2016, and in accordance with the second paragraph of Article 147 of Law 18,046, agreed to update the Company’s General Habitual Transactions Policy.

- On October 19, 2016, it was reported to the Chilean Securities and Insurance Supervisor that the deadline had expired that had been set by the Extraordinary Shareholders’ Meeting held on June 7, 2016 to subscribe and pay for new shares issued under the capital increase agreed at that meeting and approved by the SVS under Resolution 2345 dated June 28, 2016. Accordingly, 17,273,478 new shares had been subscribed and paid for. Therefore, the Company’s share capital is Ch$ 166,185,018,864 divided into 244,505,754 shares, fully subscribed and paid by the shareholders prior to this date. In compliance with Article 56 of the Regulations governing Corporations, a Board meeting on this date agreed to record this event in a public deed, which is being recorded in the margins of the Company’s registration in the Trade Register of the Santiago Property Register.

- On July 15, 2016, it was reported to the Chilean Securities and Insurance Supervisor that the capital increase process for Consorcio Financiero includes subscribing and paying ThCh$ 47,000,002 for 17,273,062 shares in Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A.

- On July 13, 2016, the Company reported to the Chilean Securities and Insurance Supervisor that it has exercised its legal preferential right on July 12 to subscribe to 134,215,462 shares in Almendral S.A. and paid Ch$ 4,912,285,909. This subscription represents the Company’s entire preferential rights.

The share capital increase at Almendral S.A. was approved at an Extraordinary Shareholders’ Meeting held on May 20, 2016, and recorded in a public deed with the same date, at the Santiago Notary Mr. Patricio Raby Benavente. This meeting agreed to increase the share capital of that company by up to Ch$175,000 million by issuing up to 4,700 million shares, which was duly approved by the Chilean Securities and Insurance Supervisor.

Furthermore, notwithstanding Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A.’s habitual transactions policy,

- On July 12, 2016, the Company subscribed to 134,215,462 shares in Almendral S.A. and paid it Ch$ 4,912,285,909. This subscription represents the Company’s entire preferential right.

On July 6, 2016, it was reported to the Chilean Securities and Insurance Supervisor that in Resolution 2345 dated June 28, 2016 the Chilean Securities and Insurance Supervisor had approved the bylaw reform submitted for its consideration by Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., in order to increase the Company’s share capital by Ch$ 55,000 million through issuing 20,213,157 shares, as agreed at an Extraordinary Shareholders’ Meeting held on June 7, 2016. The approval certificate issued by the SVS was published in the Official Journal on July 2, 2016 and registered in the Trade Register of the Santiago Property Register on June 30, 2016. An Extraordinary Board Meeting was held on the same date, where it was agreed that the period for exercising preferential rights to subscribe for these shares

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should begin on July 14, 2016. The duration of period to exercise preferential rights will be 30 days from July 14, 2016. Therefore, those shareholders who do not exercise their preferential rights will lose them when this period expires. This information will be duly published in El Diario Financiero on July 7, 2016, in compliance with the applicable legal and administrative regulations.

On June 8, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market and other applicable regulations, it was reported to the Superintendent that an Extraordinary Shareholders’ Meeting of the Company was held on June 7, 2016, which agreed the following:

• Approve a capital increase of Ch$ 55,000,000,000 (fifty-five thousand million pesos), by issuing shares.

• Approved the corresponding changes to the bylaws that are subject to approval by the Superintendent.

• Adopt all other agreements that are conducive or necessary to complete this capital increase and amend the bylaws as required to fulfill this objective.

- On May 19, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market and other applicable regulations, it was reported to the Superintendent that on May 18, 2016 the Board convened an Extraordinary Shareholders’ Meeting of the Company for June 7, 2016. The following matters are to be addressed:

• Approve a capital increase of Ch$ 55,000,000,000 (fifty-five thousand million pesos), by issuing shares.

• The corresponding changes to the bylaws are subject to approval by the Superintendent.

• Adopt all other agreements that are conducive or necessary to complete this capital increase and amend the bylaws as required to fulfill this objective.

- On April 28, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market and other applicable regulations, it was reported to the Superintendent that at a Board Meeting held on April 27, 2016, it was agreed to appoint Mr. Marcos Buchi Buc as Chairman of Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. for a period of three years.

- On April 27, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market, I hereby report as a Material Event that an Ordinary Shareholders’ Meeting of Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. was held on April 26, 2016, at 10:00am. All the shareholders entitled to vote attended this meeting and they unanimously agreed the following:







• Designate Fitch Chile Clasificadora de Riesgo Limitada and ICR Compañía Clasificadora de Riesgo for the corresponding risk rating.



- On April 1, 2016, it was reported to the Chilean Securities and Insurance Supervisor that a Board Meeting of Consorcio Financieros S.A. (Parent Company of Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A.) was held on March 30, 2016, where the Board, together with the controlling shareholders P&S S.A. and Banvida S.A. agreed a “Term Sheet for IFC and IFC Financial Institutions Growth Fund, LP Proposed Equity Investment” with the International Finance Corporation.

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According to the Material Event reported by Consorcio Financiero yesterday, this agreement sets out the general terms and conditions of the proposal by IFC, which includes subscribing and paying US$ 140 million for a capital increase in Consorcio Financiero S.A. This capital increase will be mainly used to subscribe and pay for capital increases of US$ 70 million in each of Consorcio Financiero S.A.’s principal subsidiaries. These are Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. and Banco Consorcio, to enable them to continue with their plans to develop, strengthen and grow their businesses.

The completion of the transaction under the terms of this agreement is subject to the usual regulatory and company approvals for such transactions, and the approvals required for IFC and the Agreement, and execution of the transaction documents in terms satisfactory to the parties.

COMPAÑÍA DE SEGUROS GENERALES CONSORCIO NACIONAL DE SEGUROS S.A.

- On November 24, 2016, in accordance with paragraph 2 of Article 147 of Law 18,046, it was reported to the Chilean Securities and Insurance Supervisor that at a Board Meeting held on November 23, 2016, it was agreed to update the Company’s General Habitual Transaction Policy.

- On April 28, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market and other applicable regulations, it was reported to the Superintendent that at a Board Meeting held on April 27, 2016, it was agreed to appoint Mr. Marcos Buchi Buc as Chairman of Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. for a period of three years.

- On April 27, 2016, in accordance with Article 9 and paragraph 2 of Article 10 of Law 18,045 governing the Stock Market, it was reported as a Material Event that an Ordinary Shareholders’ Meeting of Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. was held on April 26, 2016, at 10:00am. All the shareholders entitled to vote attended this meeting and they unanimously agreed the following:


• Not distribute dividends in 2016.





• Appoint Fitch Chile Clasificadora de Riesgo Limitada and Feller & Rate Clasificadora de Riesgo as risk raters.



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2016 ANNUAL REPORT CONSORCIO FINANCIERO07 C

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ESTADOS FINANCIEROS

NOTE 35 - SUBSEQUENT EVENTS

CONSORCIO FINANCIERO S.A.- On March 20, 2017, the Chilean Securities and Insurance Supervisor registered in the Securities Register the bond lines numbered 854 and

855 of Consorcio Financiero S.A. The documents issued were virtual bearer bonds with 10 and 30 year terms respectively. The bonds placed under these lines may not jointly exceed UF 4,000,000.

BANCO CONSORCIO- On February 17, 2017, Banco Consorcio sold 12,308 shares and 30,000 warrants of Automotora Gildemeister S.A. in an electronic auction

with the Chilean Electronic Stock Exchange, at a unit price of Ch$ 67,048 and Ch$ 2,681 respectively, payable immediately. The auction was arranged by Consorcio Corredores de Bolsa S.A., a subsidiary of Banco Consorcio, who received a payment of Ch$ 905,656,784.

NOTE 36 - APPROVAL OF ThE FINANCIAL STATEMENTS

These financial statements were approved during the Board meeting held on March 29, 2017.

NOTE 37 - COVENANTS

1. CLEAN DEBTConsorcio Financiero S.A. is currently subject to covenants associated with 3 bank loans with 3 counterparties. Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A. is currently subject to covenants associated with bank loans. Management calculates and controls these covenants on a monthly basis.

As of December 31, 2016, the Company has complied with all these covenants.

COUNTERPART FINANCIAL RESTRICTIONS LIMIT 12/31/2016Banco Chile CFSA Debt-to-Equity Ratio 0.55 0.25

CNS Vida Debt-to-Equity Ratio 12.5 9.54Banco Estado CFSA Debt-to-Equity Ratio 0.55 0.25Banco Santander Net Financial Debt 0.40 0.20

COVENANTS OWNED BY CFSA LIMIT 12/31/2016Banco Chile CNS Vida 99.00% 99.90%Banco Estado CNS Vida 99.00% 99.90%

Banco Santander

CNS Vida 51.00% 99.90%CN Life 51.00% 100.00%CNS Generales 51.00% 100.00%CCB 51.00% 100.00%Bco. Consorcio 51.00% 100.00%

Liabilities, CFSA

ThCh$Current tax liabilities 19,118Other non-financial liabilities 44,038,662Deferred tax liabilities 726,010Other financial liabilities 186,089,862Employee benefits provisions 148,257TOTAL LIABILITIES 231,021,909

Liabilities, CNS Vida

ThCh$Financial liabilities 124,514,370Insurance accounts (technical reserves and other insurance operations) 4,559,571,972Reinsurer's share of technical reserves (1,221,558)Other liabilities 93,659,071TOTAL LIABILITIES 4,776,523,855

Note: These amounts are taken from the respective company’s individual financial position statements.

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2. BONDS ISSUED BY CONSORCIO FINANCIERO S.A.De acuerdo al prospecto y contrato de emisión de los Bonos Serie A y B, la Sociedad Matriz convino las siguientes restricciones:

2.1. To maintain a net financial debt ratio of less than 0.40 times the company’s total equity, according to its quarterly financial statements.

2.2. To refrain from constituting guarantees (pledges or mortgages) on the assets, in order to guarantee new bond issues or any other loan or credit transaction, unless the total amount of all the obligations guaranteed by the Parent Company does not exceed 10% of its total assets.

2.3. That the Parent Company shall maintain direct or indirect control of significant subsidiaries, either independently or through shareholders’ agreements. It shall directly or indirectly hold at least 51% of the shares issued by Compañía de Seguros de Vida Consorcio Nacional de Seguros S.A., CN Life Compañía de Seguros de Vida S.A., Compañía de Seguros Generales Consorcio Nacional de Seguros S.A., Consorcio Corredores de Bolsa S.A. and Banco Consorcio S.A.

As of December 31, 2016, the Parent Company had complied with all of these restrictions.

The net financial debt, guarantees and total percentage ownership of these companies are calculated as follows:

Net Financial Debt:


ThCh$Other financial liabilities 186,089,862Cash and cash equivalents. 707,418Equity attributable to shareholders of the parent company 909,819,963NET FINANCIAL DEBT 0.20 TIMES

Guarantees:

No guarantees have been constituted using the Company’s assets subsequent to the date of the Issuance Agreement.

CFSA Percentage Ownership:

COMPANYTOTAL OWNERShIP

(%)CNS Vida 99.90%CN Life 100%CNS Generales 100%Consorcio Corredores de Bolsa 100%Banco Consorcio 100%


7.1SUMMARY FINANCIAL STATEMENTS FOR SUBSIDIARIES

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224229234239244247250253256259262265268271

COMPAÑÍA DE SEGUROS DE VIDA CONSORCIO NACIONAL DE SEGUROS S.A. BANCO CONSORCIO AND SUBSIDIARIES (CONSOLIDATED)

COMPAÑIA DE SEGUROS DE VIDA CONSORCIO SEGUROS S.A. COMPAÑÍA DE SEGUROS GENERALES CONSORCIO NACIONAL DE SEGUROS S.A.

CF CAYMAN LTD CF INVERSIONES PERU S.A.C.

CONSORCIO INVERSIONES FINANCIERAS SPA CONSORCIO SERVICIOS S.A.

CONSORCIO INVERSIONES LIMITADA CONSORCIO INVERSIONES DOS LTDA

INVERSIONES CONTINENTAL BÍO BÍO SPA INMOBILIARIA PUNTA PITE S.A.

INMOBILIARIA LOTE 18 S.A. CONSTRUCTORA E INMOBILIARIA PRESIDENTE RIESCO S.A.

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FINANCIAL STATEMENTS

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COMPAÑÍA DE SEGUROS DE VIDA CONSORCIO SEGUROS S.A.



Dear Shareholders and Directors

Seguros de Vida Consorcio Nacional de Seguros S.A.

We have audited the attached financial statements of Seguros de Vida Consorcio Nacional de Seguros S.A., which comprise the statement of financial position as of December 31, 2016, and the related statements of comprehensive income, changes in equity, and cash flows for the year then ended, and the related notes to the financial statements. Note Nº 6.III has not been audited by us and therefore it is not covered by this report.

Management responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with instructions and standards for the preparation and presentation of financial information issued by the Chilean Securities and Insurance Supervisor. This responsibility includes the design, implementation and maintenance of relevant internal controls for the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform our work to obtain reasonable assurance that the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we do not express such an opinion. An audit also includes evaluating the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.


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Opinion

In our opinion, the financial statements referred to above present fairly in all material aspects the financial position of Seguros de Vida Consorcio Nacional de Seguros S.A. as of December 31, 2016, and the results of its operations and cash flows for the year then ended, in accordance with instructions and standards for the preparation and presentation of financial information issued by the Chilean Securities and Insurance Supervisor.

Other matters - Additional information

Our audit was performed with the purpose of forming an opinion on the financial statements as a whole. The information below is disclosed in order to provide an analysis that is in addition to the information normally provided in the financial statements as of December 31, 2016:

Note 44.3 Foreign currency

Technical Table 6.01 Contribution margin

Technical Table 6.02 Opening premium reserves

Technical Table 6.03 Claims costs

Technical Table 6.04 Revenue costs

Technical Table 6.05 Reserves

Technical Table 6.06 Pension insurance

Technical Table 6.07 Premiums

Technical Table 6.08 Data

Management is responsible for this additional information, which was directly related to the underlying records and accounts used to prepare the financial statements as of December 31, 2016. The above additional information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional selected procedures, including comparing and reconciling such information directly to the underlying records and accounts used to prepare the financial statements, or directly with same financial statements and other additional procedures, in accordance with generally accepted auditing standards in Chile.

In our opinion the supplementary information as of December 31, 2016 is fairly presented in all material aspects related to the financial statements as a whole.

Other matters - Previous auditor

The financial statements of Seguros de Vida Consorcio Nacional de Seguros S.A. for the year ended December 31, 2015, were audited by other auditors, who issued an unqualified opinion in their report dated February 29, 2016.

Other matters - Omission of comparative information

In accordance with instructions issued by the Chilean Securities and Insurance Supervisor, the notes to the financial statements described in the first paragraph and the notes and technical tables referred to in the preceding paragraph do not include comparative information.


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As of December 31, 2016 and 2015 STATEMENTS OF FINANCIAL POSITION

12-31-2016 12-31-2015TOTAL ASSETS 5,297,390,433 4,787,395,793TOTAL FINANCIAL INVESTMENTS 4,419,498,287 3,963,863,268Cash and cash equivalents 3,598,07910,947,950Financial assets at fair value 498,675,690 391,637,360FINANCIAL ASSETS AT AMORTIZED COST 3,301,114,004 3,004,581,067LOANS 1,344,826 1,327,184 Advances to policyholders 1,344,826 1,327,184 Loans granted 0 0INVESTMENT INSURANCE - SINGLE INVESTMENT ACCOUNT (CUI) 566,999,703 501,604,986

INVESTMENTS IN GROUP COMPANIES 47,765,985 53,764,721 Investments in subsidiary companies 0 0INVESTMENT IN ASSOCIATED COMPANIES 47,765,985 53,764,721 TOTAL REAL ESTATE INVESTMENTS 804,331,739 722,068,381 Property investments 381,749,826 332,942,701LEASING RECEIVABLES 401,991,819 368,889,021PROPERTY, FURNITURE AND EQUIPMENT FOR OWN USE 20,590,094 20,236,659Property for own use 16,993,518 16,855,293FURNITURE AND EQUIPMENT FOR OWN USE 3,596,576 3,381,366NON-CURRENT ASSETS hELD FOR SALE 0 0TOTAL INSURANCE ACCOUNTS 6,014,388 4,225,324Insurance receivables 4,792,830 3,679,694Insured accounts receivable 3,553,918 3,084,876 Reinsurance receivables 1,238,912 594,818Claims receivable from reinsurers 1,118,249 431,662Accepted reinsurance premiums receivable 0 0Non-proportional reinsurance assets 120,663 163,156OThER RECEIVABLES FOR REINSURANCE TRANSACTIONS 0 0RECEIVABLES FOR COINSURANCE TRANSACTIONS 0 0Premiums receivable for coinsurance transactions 0 0CLAIMS RECEIVABLE FOR COINSURANCE TRANSACTIONS 0 0REINSURER’S SHARE OF TECHNICAL RESERVES 1,221,558 545,630 REINSURER'S ShARE OF CURRENT RISK RESERVES 0 0Reinsurer's share of pension insurance reserves 0 0Reinsurer's share of annuities reserves 0 0Reinsurer's share of disability and survival insurance reserves 0 0Reinsurer's share of mathematical reserve 0 0Reinsurer's share of private revenue reserves 0 0Reinsurer's share of claims reserve 1,221,558 545,630 Reinsurer's share of premium insufficiency reserves 0 0REINSURER'S ShARE OF OThER TEChNICAL RESERVES 0 0OThER ASSETS 67,546,019 97,238,820 INTANGIBLE ASSETS 2,431,824 1,654,234 GOODWILL 1,141,306 773,453 INTANGIBLE ASSETS OThER ThAN GOODWILL 1,290,518 880,781 TAXES RECEIVABLE 1,748,620 1,337,720 Receivables for current taxes 1,748,620 1,337,720 DEFERRED TAX ASSETS 0 0OTHER ASSETS 63,365,575 94,246,866 Receivables from employees 1,179,604 901,807 Brokerage accounts receivable 0 0Related party receivables 23,088,355 18,803,501 Prepaid expenses 243,536 248,817 Other assets 38,854,080 74,292,741

12-31-2016 12-31-2015

TOTAL EQUITY AND LIABILITIES (B+C) 5,297,390,433 4,787,395,793

TOTAL LIABILITIES 4,796,913,053 4,375,177,198FINANCIAL LIABILITIES 143,682,010 280,005,926NON-CURRENT LIABILITIES hELD FOR SALE 0 0TOTAL INSURANCE ACCOUNTS 4,559,571,972 4,027,362,587TEChNICAL RESERVES 4,555,718,872 4,024,381,789Current risk reserves 5,980,027 4,231,629PENSION INSURANCE RESERVES 3,887,822,310 3,433,845,566Annuity reserves 3,887,570,194 3,433,591,223Disability and survival insurance reserves 252,116 254,343Mathematical reserves 44,436,386 37,406,716Fund value reserves 566,096,032 501,093,286Private revenue reserves 40,314,251 39,062,943Claims reserves 10,088,388 8,228,258Earthquake catastrophe reserves 0 0Premium insufficiency reserves 96,582 67,496Other technical reserves 884,896 445,895PAYABLES ON INSURANCE TRANSACTIONS 3,853,100 2,980,798Payables to insured parties 2,515,106 2,339,623PAYABLES ON REINSURANCE TRANSACTIONS 1,337,994 641,175Payables on coinsurance transactions 0 0Premiums payable on coinsurance transactions 0 0Claims payable on coinsurance transactions 0 0Prepaid income on reinsurance transactions 0 0OThER LIABILITIES 93,659,071 67,808,685Provisions 0 0OThER LIABILITIES 93,659,071 67,808,685TAXES PAYABLE 17,209,659 7,612,971Current tax accounts payable 5,997,215 3,229,709Deferred tax liabilities 11,212,444 4,383,262Payables to related parties 111,200 4,002,349Brokerage payables 1,033,281 848,383Payables to employees 9,456,437 8,313,776Prepaid income 0 0Other non-financial liabilities 65,848,494 47,031,206TOTAL ShAREhOLDER'S EQUITY 500,477,380 412,218,595Share capital 166,185,019 119,183,885Reserves (2,718,910) 6,676,397RETAINED EARNINGS 335,246,917 286,145,929Accumulated earnings 250,029,048 250,974,132Net Income for the year 85,217,869 35,171,797Dividends 0 0Other adjustments 1,764,354 212,384


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As of December 31, 2016 and 2015STATEMENTS OF COMPREhENSIVE INCOME

As of December 31, 2016 and 2015STATEMENT OF CASh FLOWS

12-31-2016 12-31-2015CONTRIBUTION MARGIN (CM) (120,469,105) (117,087,639)RETAINED PREMIUMS 687,862,210 548,173,940Direct premiums 692,320,773 549,838,055Accepted premiums 0 0Assigned premiums 4,458,563 1,664,115VARIATIONS IN TEChNICAL RESERVES 58,654,632 74,055,904Change in current risk reserves 1,613,357 44,402Change in mathematical reserves 6,052,370 2,956,856Change in fund value reserves 50,535,716 73,437,430Change in earthquake reserves 0 0Change in premium insufficiency reserves 28,262 (162,453)Change in other technical reserves 424,927 (2,220,331)COST OF CLAIMS 111,780,461 88,201,838Direct claims 115,386,486 89,231,559Assigned claims 3,606,025 1,029,721Accepted claims 0 0COST OF INCOME 605,787,541 475,546,356Direct income 603,484,364 473,040,695Assigned income 0 0Accepted income 2,303,177 2,505,661BROKERAGE INCOME 31,681,281 26,436,022Direct agents commission 23,215,484 21,205,565Brokers and pension advisors commission 8,465,797 5,230,457Accepted reinsurance commission 0 0Assigned reinsurance commission 0 0Non-pension reinsurance expense 738,998 661,738Medical expenses 272,003 119,105Insurance impairment (583,601) 240,616ADMINISTRATIVE EXPENSES (AE) 55,648,486 43,317,669Remunerations 23,066,424 21,289,901Others 32,582,062 22,027,768INVESTMENT INCOME (II) 310,030,153 220,959,742NET REALIZED INVESTMENT INCOME 34,063,358 35,226,231Property investments 6,817,744 2,351,375Financial investments 27,245,614 32,874,856NET UNREALIZED INVESTMENT INCOME 29,942,112 (28,773,545)Property investments 306,544 (131,758)Financial investments 29,635,568 (28,641,787)NET ACCRUED INVESTMENT INCOME 233,742,869 197,715,441Property investments 46,168,347 41,402,110Financial investments 195,193,413 165,125,854Depreciation 3,929,024 3,252,928Management expenses 3,689,867 5,559,595Net Investment Income from Insurance Policies with Single Investment Account (CUI)

14,887,532 27,368,532

Investment impairment 2,605,718 10,576,917TEChNICAL INCOME FROM INSURANCE (CM + II + AE) 133,912,562 60,554,434OThER INCOME AND EXPENDITURE 4,217,607 3,591,075Other income 7,574,711 6,533,712Other expenses 3,357,104 2,942,637Exchange differences (9,932,111) 13,421,160Gain (loss) on indexed units (25,092,742) (37,315,625)Net income on continuing operations before tax 103,105,316 40,251,044Net income on discontinued and held-for-sale operations (net of tax) 0 0Income taxes 17,887,447 5,079,247TOTAL NET INCOME FOR ThE YEAR 85,217,869 35,171,797

STATEMENT OF OThER COMPREhENSIVE INCOMEIncome from the revaluation of properties, furniture and equipment 0 0Income from financial assets 0 0Income from cash flow hedging 0 0Other income taken to equity 1,551,970 15,256Deferred taxes 0 0TOTAL OThER COMPREhENSIVE INCOME 1,551,970 15,256TOTAL COMPREhENSIVE INCOME 86,769,839 35,187,053

12-31-2016 12-31-2015RECEIPTS FROM OPERATING ACTIVITIES RECEIPTS FROM INSURANCE AND COINSURANCE PREMIUMS 697,628,643 554,342,981

Receipts from accepted reinsurance premiums 0 0 Refunds of revenues and claims 19,279,336 15,922,794 Receipts from revenues and claims reinsured 2,120,841 685,344 Receipts from assigned reinsurance commissions 0 0 Receipts from financial assets at fair value 5,795,524,303 3,496,973,005 Receipts from financial assets at amortized cost 1,797,263,511 1,923,411,336 Receipts from property 0 0 Interests and dividends received 7,802,946 13,623,177 Loans and receivables 32,838,826 7,427,692 Other receipts from insurance activities 146,925 490,695 TOTAL RECEIPTS FROM INSURANCE ACTIVITIES 8,352,605,331 6,012,877,024 PAYMENTS FOR OPERATING ACTIVITIES Payments for direct insurance and coinsurance services 2,586,702 1,639,052 Payments of revenues and claims 392,830,281 341,063,969 Payments of direct insurance commissions 9,366,489 7,183,648 Payments of accepted reinsurance commissions 0 0 Payments for financial assets at fair value 5,852,568,131 3,646,760,333 Payments for financial assets at amortized cost 1,949,049,934 1,856,350,765 Payments for property 0 0 Tax expenses 12,560,728 10,624,425 Administrative expenses 119,944,666 81,489,238 Other payments for insurance activities 1,432,874 102,256 TOTAL PAYMENTS FOR INSURANCE ACTIVITIES 8,340,339,805 5,945,213,686 TOTAL NET CASh FLOW FROM OPERATING ACTIVITIES 12,265,526 67,663,338 CASh FLOW ON INVESTING ACTIVITIES RECEIPTS FROM INVESTING ACTIVITIES Receipts from property, furniture and equipment 261,269 450 Receipts from property investments 154,468,958 235,129,089 Receipts from intangible assets 0 0 Receipts from assets held for sale 0 0 Receipts from shares in group companies and subsidiaries 0 0 Other receipts related to investing activities 0 0 TOTAL RECEIPTS FROM INVESTING ACTIVITIES 154,730,227 235,129,539 PAYMENTS FOR INVESTING ACTIVITIES Payments for property, furniture and equipment 1,958,104 1,394,040 Payments for investment property 172,726,834 261,080,385 Payments for intangible assets 0 0 Payments for assets held for sale 0 0 Payments for shares in group companies and subsidiaries 0 0 Other payments related to investing activities 0 0 TOTAL PAYMENTS FOR INVESTING ACTIVITIES 174,684,938 262,474,425 TOTAL NET CASh FLOW FROM INVESTING ACTIVITIES (19,954,711) (27,344,886) CASh FLOW ON FINANCING ACTIVITIES RECEIPTS FROM FINANCING ACTIVITIES Receipts from issuing equity instruments 0 0 Receipts from related company loans 4,716,866 8,640,692 Receipts from bank loans 66,641 41,927 Capital increases 47,001,133 0 Other receipts related to financing activities 0 0 TOTAL RECEIPTS FROM FINANCING ACTIVITIES 51,784,640 8,682,619 PAYMENTS FOR FINANCING ACTIVITIES Shareholder dividends 21,157,818 38,401,247 Interest paid 18,505,548 327,813 Reduction in capital 0 0 Payments for related company loans 11,801,614 9,314,882 Other payments related to financing activities 0 0 TOTAL PAYMENTS FOR FINANCING ACTIVITIES 51,464,980 48,043,942 TOTAL NET CASh FLOW FROM FINANCING ACTIVITIES 319,660 (39,361,323) Receipts from exchange variances 19,654 1,953 TOTAL ChANGE IN CASh AND CASh EQUIVALENTS (7,349,871) 959,082 Initial balance of cash and cash equivalents 10,947,950 9,988,868 Final balance of cash and cash equivalents 3,598,079 10,947,950 COMPONENTS OF CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR Cash floats 207,327 5,064,416 Bank balances 3,390,752 5,883,534 Cash equivalents 0 0

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STATEMENT OF ChANGES IN NET EQUITY

ShARE CAPITAL

ShARE PREMIUM

MATChING ADJUSTMENT

RESERVES

SINGLE INVESTMENT

ACCOUNT (CUI)

INSURANCE RESERVES

OThER RESERVES RESERVES

RETAINED EARNINGS

FROM PREVIOUS

YEARS

NET INCOME FOR ThE

YEARRETAINED EARNINGS

OThER INCOME

WITh EQUITY ADJUSTMENTS

OThER ADJUSTMENTS

EQUITY AS OF 12-31-2016

Initial Equity prior to Adjustments 119,183,885 2,179,198 2,086,996 (137,206) 2,547,409 6,676,397 250,974,132 35,171,797 286,145,929 212,384 212,384 412,218,595Adjustments from Previous Years 0 0 0 0 0 0 0 0 0 0 0 0Initial Equity for the Year 119,183,885 2,179,198 2,086,996 (137,206) 2,547,409 6,676,397 250,974,132 35,171,797 286,145,929 212,384 212,384 412,218,595Comprehensive Income 0 0 0 0 0 0 0 85,217,869 85,217,869 1,551,970 1,551,970 86,769,839Net Income for the Year 0 0 0 0 0 0 0 85,217,869 85,217,869 0 0 85,217,869Total Income (Expenses) Credited (Charged) to Equity

0 0 0 0 0 0 0 0 0 1,551,970 1,551,970 1,551,970

Income from revaluation of property, plant and equipment

0 0 0 0 0 0 0 0 0 0 0 0

Income from financial assets 0 0 0 0 0 0 0 0 0 0 0Income from cash flow hedging 0 0 0 0 0 0 0 0 0 0 0 0Other income with equity adjustments 0 0 0 0 0 0 0 0 0 1,551,970 1,551,970 1,551,970Deferred taxes 0 0 0 0 0 0 0 0 0 0 0Other comprehensive income 0 0 0 0 0 0 0 0 0 1,551,970 1,551,970 1,551,970Transfers to Retained Earnings 0 0 0 0 0 0 35,171,797 (35,171,797) 0 0 0 0Shareholder Transactions 47,001,134 0 0 0 0 0 (36,116,881) 0 (36,116,881) 0 0 10,884,253Capital Increase (Decrease) 47,001,134 0 0 0 0 0 0 0 0 0 0 47,001,134(-) Dividend Distribution 0 0 0 0 0 0 21,103,061 0 21,103,061 0 0 21,103,061Other Shareholder Transactions 0 0 0 0 0 0 (15,013,820) 0 (15,013,820) 0 0 (15,013,820)Reserves 0 0 (9,293,537) (101,770) 0 (9,395,307) 0 0 0 0 (9,395,307)Transfer of Equity to Income 0 0 0 0 0 0 0 0 0 0 0 0FINAL EQUITY FOR ThE YEAR 166,185,019 2,179,198 (7,206,541) (238,976) 2,547,409 (2,718,910) 250,029,048 85,217,869 335,246,917 1,764,354 1,764,354 500,477,380

ShARE CAPITAL

ShARE PREMIUM

MATChING ADJUSTMENT

RESERVES

SINGLE INVESTMENT

ACCOUNT (CUI)

INSURANCE RESERVES

OThER RESERVES RESERVES

RETAINED EARNINGS

FROM PREVIOUS

YEARS

NET INCOME FOR ThE

YEARRETAINED EARNINGS

OThER INCOME

WITh EQUITY ADJUSTMENTS

OThER ADJUSTMENTS

EQUITY AS OF 12-31-2015

Initial Equity prior to Adjustments 119,183,885 2,179,198 6,390,655 (131,727) 2,547,409 10,985,535 220,702,160 60,942,895 281,645,055 197,128 197,128 412,011,603Adjustments from Previous Years 0 0 0 0 0 0 0 0 0 0 0 0Initial Equity for the Year 119,183,885 2,179,198 6,390,655 (131,727) 2,547,409 10,985,535 220,702,160 60,942,895 281,645,055 197,128 197,128 412,011,603Comprehensive Income 0 0 0 0 0 0 0 35,171,797 35,171,797 15,256 15,256 35,187,053Net Income for the Year 0 0 0 0 0 0 0 35,171,797 35,171,797 0 0 35,171,797Total Income (Expenses) Credited (Charged) to Equity

0 0 0 0 0 0 0 0 0 15,256 15,256 15,256

Income from revaluation of property, plant and equipment

0 0 0 0 0 0 0 0 0 0 0 0

Income from financial assets 0 0 0 0 0 0 0 0 0 0 0 0Income from cash flow hedging 0 0 0 0 0 0 0 0 0 0 0 0Other income with equity adjustments 0 0 0 0 0 0 0 0 0 15,256 15,256 15,256Deferred taxes 0 0 0 0 0 0 0 0 0 0 0Other comprehensive income 0 0 0 0 0 0 0 0 0 15,256 15,256 15,256Transfers to Retained Earnings 0 0 0 0 0 0 60,942,895 (60,942,895) 0 0 0 0Shareholder Transactions 0 0 0 0 0 0 (30,670,923) 0 (30,670,923) 0 0 (30,670,923)Capital Increase (Decrease) 0 0 0 0 0 0 0 0 0 0 0 0(-) Dividend Distribution 0 0 0 0 0 0 38,402,255 0 38,402,255 0 0 38,402,255Other Shareholder Transactions 0 0 0 0 0 0 7,731,332 0 7,731,332 0 0 7,731,332Reserves 0 0 (4,303,659) (5,479) 0 (4,309,138) 0 0 0 0 (4,309,138)Transfer of Equity to Income 0 0 0 0 0 0 0 0 0 0 0 0CLOSING EQUITY FOR ThE YEAR 119,183,885 2,179,198 2,086,996 (137,206) 2,547,409 6,676,397 250,974,132 35,171,797 286,145,929 212,384 212,384 412,218,595


229

BANCO CONSORCIO Y FILIALES


Santiago, February 27, 2017

Shareholders and Directors of Banco Consorcio

We have audited the accompanying Consolidated Financial Statements of Banco Consorcio and subsidiaries which comprise the consolidated statements of financial position as of December 31, 2016 and 2015 and the related statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.


Management is responsible for the preparation and fair presentation of these consolidated financial statements based on accounting standards and instructions issued by the Superintendent of Banks and Financial Institutions. This responsibility includes the design, implementation, and maintenance of relevant internal controls for the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform our work to obtain reasonable assurance that the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we do not express such an opinion. An audit also includes evaluating the accounting policies used and the reasonableness of significant accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements.


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BANCO CONSORCIO Y FILIALES

Santiago, 27 February 2017

Banco Consorcio

2


Opinion

In our opinion, the consolidated financial statements referred to above present fairly in all material aspects the financial position of Banco Consorcio and its subsidiaries as of December 31, 2016 and 2015, and the results of their operations and cash flows for the years then ended, in accordance with the accounting standards and instructions issued by the Superintendent of Banks and Financial Institutions.


231


CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

NOTES12-31-2016

MCh$12-31-2015

MCh$ASSETSCash and bank deposits 6 27,409 59,297Transactions pending settlement 6 32,762 74,902Traded securities 7 66,573 89,097Repurchase contracts and securities lending 8 5,504 12,782Financial derivative contracts 10 13,493 11,458Loans to banks 9 59,936 -Loans and receivables from customers 11 1,792,983 1,590,997Securities held for sale 12 1,163,586 790,539Securities held to maturity - -Investments in companies 13 2,321 2,460Intangible assets 14 1,330 1,108Property, plant and equipment 15 6,745 7,016Current taxes 16 910 1,557Deferred taxes 16 28,664 35,264Other assets 17 36,246 35,601 TOTAL ASSETS 3,238,462 2,712,078LIABILITIES AND ShAREhOLDER'S EQUITYLIABILITIESCurrent accounts and other demand deposits 18 58,997 56,802Transactions pending settlement 6 24,176 59,706Repurchase contracts and securities lending 8 323,857 235,299Deposits and other borrowings 18 1,748,107 1,563,036Financial derivative contracts 10 10,209 17,792Bank borrowings 19 176,073 123,469Debt instruments issued 21 456,099 314,869Other financial liabilities 20 4 17Current taxes 16 383 435Deferred taxes 16 12,916 10,945Provisions 22 18,508 13,896Other liabilities 23 22,994 29,925TOTAL LIABILITIES 2,852,323 2,426,191EQUITYATTRIBUTABLE TO OWNERS OF ThE BANK:Share capital 25 356,572 291,876Reserves (116) (5,581)

Revaluation accounts 12 and

25 (3,718) (25,183)

Retained earnings:Retained earnings from previous years 25 - -Net income for the year 25 47,716 35,392Less: Provision for minimum dividends 25 (14,315) (10,617)Minority interest 25 - -TOTAL ShAREhOLDER'S EQUITY 386,139 285,887TOTAL LIABILITIES AND EQUITY 3,238,462 2,712,078

NOTES12-31-2016

MCh$12-31-2015

MCh$Revenue from interest and indexation 26 140,146 123,496Expenses on interest and indexation 26 (90,443) (82,251)NET INCOME FROM INTEREST AND INDEXATION 49,703 41,245

Revenue from commissions 27 8,035 8,373Expenses on commissions 27 (2,342) (2,073)NET INCOME FROM COMMISSIONS 5,693 6,300

Net financial operating income 28 54,749 18,343Net foreign exchange transactions 29 (14,028) 22,153Other operating income 34 1,323 1,039TOTAL OPERATING REVENUE 97,440 89,080Provisions for loan losses 30 (10,216) (6,359)NET OPERATING REVENUE 87,224 82,721Remuneration and staff expenses 31 (17,649) (15,724)Administration expenses 32 (11,314) (9,394)Depreciation and amortization 33 (998) (977)Impairment 33 3,428 (14,660)Other operating expenses 34 (1,622) (1,135)TOTAL OPERATING EXPENSES (28,155) (41,890)NET OPERATING INCOME 59,069 40,831Income from investments in other companies 13 6 3Net income before income tax 59,075 40,834Income tax 16 (11,359) (5,442)NET INCOME FOR ThE YEAR 47,716 35,392Attributable to:Owners of the bank 25 47,716 35,392Minority interest 25 - -

12-31-2016Ch$

12-31-2015Ch$

NET EARNINGS PER ShARE FOR ThE BANK’S OWNERS (EXPRESSED IN ChILEAN PESOS):Basic earnings per share 249,519 221,002Diluted net earnings 249,519 221,002

ESTADOS DE RESULTADOS CONSOLIDADOS


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For the years ended December 31, 2016 and 2015 For the years ended December 31, 2016 and 2015

CONSOLIDATED STATEMENT OF COMPREhENSIVE INCOME

CONSOLIDATED STATEMENTS OF CASh FLOWS

NOTES12-31-2016

MCh$12-31-2015

MCh$OPERATING INCOMENet operating revenue 90,652 82,721Total operating expenses (31,583) (41,890)NET OPERATING INCOME 59,069 40,831Income from investments in companies 13 6 3NET INCOME BEFORE INCOME TAX 59,075 40,834Income tax 16 (11,359) (5,442)NET INCOME FROM CONTINUING OPERATIONS 47,716 35,392NET INCOME FOR ThE YEAR 47,716 35,392OThER COMPREhENSIVE INCOMENet change in portfolio held for sale 25 30,689 (22,281)Net change in deferred tax on portfolio held for sale 25 (9,224) 7,415

TOTAL OThER COMPREhENSIVE INCOME, NET OF TAX 21,465 (14,866)

TOTAL CONSOLIDATED COMPREhENSIVE INCOME FOR ThE YEAR 69,181 20,526

ATTRIBUTABLE TO CONSOLIDATED NET INCOME FOR ThE YEAR:Owners of the bank 47,716 35,392Minority interest - -Attributable to Consolidated Comprehensive Income for the Year:Owners of the bank 69,181 20,526Minority interest - -

NOTES12-31-2016

MCh$12-31-2015

MCh$CASh FLOW FROM OPERATING ACTIVITIES:Net income for the year 25 47,716 35,392Minority interest - -Charges (credits) not affecting cash flow:Depreciation and amortization 33 998 977Provisions for loan losses 30 10,216 6,359Income from investments in other companies 13 6 3Income and deferred taxes 11,359 5,442Other operating expenses 34 1,622 1,135Net change in interest, indexation and commissions earned on assets and liabilities

(58,824) (46,339)

ChANGES IN ASSETS AND LIABILITIES ThAT AFFECT OPERATING CASh FLOWS:Net (increase) in loans and accounts receivable (201,986) (398,278)Net (increase) in investment securities (373,047) (8,081)Net (increase) decrease in traded securities 22,524 183,547Net (increase) owed by banks (59,936) -Net decrease in other assets and liabilities 56,398 4,306Net increase in current accounts and other demand deposits 2,195 19,085Net increase (decrease) in repurchase contracts and securities lending

88,558 (30,651)

Net increase in deposits and other borrowings 185,071 101,225Net increase in short-term borrowings from banks 52,604 76,981Net (decrease) in other financial borrowings (13) (10)Net increase in debt instruments issued 141,230 45,038TOTAL CASh FLOW FROM (OR USED IN) OPERATING ACTIVITIES (73,309) (3,869)

CASh FLOWS FROM FINANCING ACTIVITIES:Dividend payments (17,696) -Capital increase 47,000 12,062TOTAL CASh FLOW FROM FINANCING ACTIVITIES 29,304 12,062CASH FLOWS FROM INVESTING ACTIVITIES:Acquisition of fixed and intangible assets 14/15 (950) (759)TOTAL CASH FLOW (USED) IN INVESTING ACTIVITIES (950) (759)TOTAL NET CASh FLOW FOR ThE YEAR (44,955) 7,434OPENING BALANCE OF CASh AND CASh EQUIVALENTS 6 80,950 73,516

CLOSING BALANCE OF CASh AND CASh EQUIVALENTS 6 35,995 80,950

SALDO FINAL DEL EFECTIVO Y EFECTIVO EQUIVALENTE 6 35.995 80.950

BANCO CONSORCIO AND SUBSIDIARIES

233


CONSOLIDATED STATEMENTS OF ChANGES IN EQUITY

CONCEPT

ATTRIBUTABLE TO OWNERS OF ThE BANK (IN MILLIONS OF ChILEAN PESOS)

NUMBER OF

ShARESShARE

CAPITAL RESERVESREVALUATION

ACCOUNTS

RETAINED EARNINGS

FROM PREVIOUS

YEARS

NET INCOME FOR ThE

YEAR

MINIMUM DIVIDEND PROVISION

SUBTOTAL ATTRIBUTABLE TO OWNERS OF

ThE BANKMINORITY INTEREST TOTAL

OPENING BALANCE AS OF JANUARY 1, 2016 160,143 291,876 (5,581) (25,183) - 35,392 (10,617) 285,887 - 285,887

Distribution of net earnings from the previous year

8,566 17,696 - - - (17,696) 10,617 10,617 - 10,617

Dividends - - - - (17,696) - (17,696) - (17,696)Capital increase 22,523 47,000 - - - - - 47,000 - 47,000Other reserves not from net income - 5,465 - - - - 5,465 - 5,465Change in portfolio held for sale - - 30,689 - - - 30,689 - 30,689Change in deferred tax on portfolio held for sale

- - (9,224) - - - (9,224) - (9,224)

Minimum dividend provision - - - - - (14,315) (14,315) - (14,315)Net income for 2016 - - - - 47,716 - 47,716 - 47,716Minority interest - - - - - - - - -CLOSING BALANCE AS OF DECEMBER 31, 2016 191,232 356,572 (116) (3,718) - 47,716 (14,315) 386,139 - 386,139

CONCEPT

ATTRIBUTABLE TO OWNERS OF ThE BANK (IN MILLIONS OF ChILEAN PESOS)

NUMBER OF

ShARESShARE

CAPITAL RESERVESREVALUATION

ACCOUNTS

RETAINED EARNINGS

FROM PREVIOUS

YEARS

NET INCOME FOR ThE

YEAR

MINIMUM DIVIDEND PROVISION

SUBTOTAL ATTRIBUTABLE TO OWNERS OF

ThE BANKMINORITY INTEREST TOTAL

OPENING BALANCE AS OF JANUARY 1, 2015 132,122 236,685 (1,191) (10,317) - 43,129 (12,939) 255,367 - 255,367

Distribution of net earnings from the previous year

21,897 43,129 - - - (43,129) 12,939 12,939 - 12,939

Capital increase 6,124 12,062 - - - - - 12,062 - 12,062Other reserves not from net income - (4,390) - - - - (4,390) - (4,390)Change in portfolio held for sale - - (22,281) - - - (22,281) - (22,281)Change in deferred tax on portfolio held for sale

- - 7,415 - - - 7,415 - 7,415

Minimum dividend provision - - - - - (10,617) (10,617) - (10,617)Net income for 2015 - - - 35,392 - 35,392 - 35,392Minority interest - - - - - - - - -CLOSING BALANCE AS OF DECEMBER 31, 2015 160,143 291,876 (5,581) (25,183) - 35,392 (10,617) 285,887 - 285,887

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CN LIFE COMPAÑIA DE SEGUROS DE VIDA S.A.



Shareholders and Directors

CN Life Compañía de Seguros de Vida S.A.

We have audited the accompanying financial statements of CN Life Compañía de Seguros de Vida S.A., which comprise the statement of financial position as of December 31, 2016, and the related statements of comprehensive income, changes in equity, and cash flows for the year then ended, and the related notes to the financial statements. Note Nº 6.III has not been audited by us and therefore it is not covered by this report.





An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation and fair presentation of the financial statements of the entity, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we do not express such an opinion. An audit also includes evaluating the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.


235


Opinion

In our opinion, the financial statements referred to above present fairly in all material aspects the financial position of CN Life Compañía de Seguros de Vida S.A. as of December 31, 2016, and the results of its operations and cash flows for the year then ended, in accordance with instructions and standards for the preparation and presentation of financial information issued by the Chilean Securities and Insurance Supervisor.



Note 25 Disability and survival insurance reserves



Technical Table 6.02 Opening premium reserves


Technical Table 6.04 Revenue costs


Technical Table 6.06 Pension insurance

Technical Table 6.07 Premiums





The financial statements of CN Life Compañía de Seguros de Vida S.A. for the year ended December 31, 2015, were audited by other auditors, who issued an unqualified opinion in their report dated February 29, 2016.




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12-31-2016 12-31-2015TOTAL ASSETS 724,633,550 695,705,783TOTAL FINANCIAL INVESTMENTS 641,211,012 601,508,062Cash and cash equivalents 373,323 404,762Financial assets at fair value 78,535,013 52,871,015Financial assets at amortized cost 561,656,867 548,090,516Loans - -Advances to policyholders - -Loans granted - -Investment insurance - Single Investment Account (CUI) - -Investments in group companies 645,809 141,769Investments in subsidiary companies - -Investment in associated companies 645,809 141,769TOTAL REAL ESTATE INVESTMENTS 68,294,364 71,017,242Property investments 32,389,899 33,451,113Leasing receivables 35,903,402 37,565,917Property, furniture and equipment for own use 1,063 212

Property for own use - -Furniture and equipment for own use 1,063 212

NON-CURRENT ASSETS hELD FOR SALE - -TOTAL INSURANCE ACCOUNTS 7,328,457 17,105,627Insurance receivables 6,713,654 16,417,857Insured accounts receivable 6,682,726 16,360,996Reinsurance receivables 30,928 56,861

Claims receivable from reinsurers 6,465 -Accepted reinsurance premiums receivable - -Non-proportional reinsurance assets 24,463 56,861Other receivables for reinsurance transactions - -

Receivables for coinsurance transactions - - Premiums receivable for coinsurance transactions - - Claims receivable for coinsurance transactions - -

Reinsurer's share of technical reserves 614,803 687,770Reinsurer's share of current risk reserves - -Reinsurer's share of pension insurance reserves 614,803 657,790

Reinsurer's share of mathematical reserves 614,803 657,790Reinsurer's share of disability and survival insurance reserves - -

Reinsurer's share of mathematical reserves - -Reinsurer's share of private revenue reserves - -Reinsurer's share of claims reserves - 29,980Reinsurer's share of premium insufficiency reserves - -Reinsurer's share of other technical reserves - -

OThER ASSETS 7,799,717 6,074,852Intangible assets 194,528 79,399 Goodwill 194,528 79,399 Intangible assets other than Goodwill - - Taxes receivable 4,751,669 5,653,414 Receivables for current taxes 704,662 3,527,755 Deferred tax assets 4,047,007 2,125,659 Other assets 2,853,520 342,039 Receivables from employees 9,711 7,022 Brokerage accounts receivable 28,140 52,538 Related party receivables 4,228 4,190 Prepaid expenses 14,286 16,530 Other assets 2,797,155 261,759

12-31-2016 12-31-2015TOTAL EQUITY AND LIABILITIES (B+C) 724,633,550 695,705,783TOTAL LIABILITIES 650,786,210 622,033,401FINANCIAL LIABILITIES 23,440,995 29,563,748NON-CURRENT LIABILITIES hELD FOR SALE - -TOTAL INSURANCE ACCOUNTS 616,266,335 580,890,088Technical reserves 615,889,127 580,524,515Current risk reserves 2,922 3,647Pension insurance reserves 613,167,109 577,535,884

Annuity reserves 538,828,209 491,769,200Disability and survival insurance reserves 74,338,900 85,766,684

Mathematical reserves 2,516,562 2,524,264Fund value reserves - -Private revenue reserves 149,990 150,093Claims reserves 52,544 143,685Earthquake reserves - -Premium insufficiency reserves - 166,942Other technical reserves - -Payables on insurance transactions 377,208 365,573Payables to insured parties 347,303 337,753Payables on reinsurance transactions 29,905 27,820Payables on coinsurance transactions - -

Premiums payable on coinsurance transactions - - Claims payable on coinsurance transactions - -

Prepaid income on reinsurance transactions - - OThER LIABILITIES 11,078,880 11,579,565Provisions - -Other liabilities 11,078,880 11,579,565Taxes payable 105,618 16,022

Current tax accounts payable 105,618 16,022Deferred tax liabilities - -

Payables to related parties 5,077 -Brokerage Payables - -Payables to employees 10,652 8,165Prepaid income - -Other non-financial liabilities 10,957,533 11,555,378TOTAL ShAREhOLDER'S EQUITY 73,847,340 73,672,382Share capital 53,644,951 53,644,951Reserves (1,189,304) 1,939,714Retained earnings 21,391,693 18,087,717 Accumulated earnings 11,449,979 5,903,500 Net Income for the year 9,941,714 12,184,217Dividends - -Other adjustments - -

237

As of December 31, 2016 and 2015 STATEMENT OF COMPREhENSIVE INCOME

As of December 31, 2016 and 2015 CONSOLIDATED CASh FLOW STATEMENT

12-31-2016 12-31-2015CONTRIBUTION MARGIN (CM) (30,786,185) (19,333,779)Retained premiums 117,904,334 149,687,459

Direct premiums 118,019,037 149,797,174Accepted premiums - -Assigned premiums 114,703 109,715

Change in technical reserves (247,978) (12,430)Change in current risk reserves (815) (461)Change in mathematical reserves (77,500) (173,916)Change in fund value reserves - -Change in earthquake reserves - -Change in premium insufficiency reserves (169,663) 161,994Change in other technical reserves - (47)

Cost of claims 81,050,183 97,919,010Direct claims 81,067,052 97,948,990Assigned claims 16,869 29,980Accepted claims - -

Cost of income 67,343,188 70,485,896Direct income 67,196,340 70,362,131Assigned income 17,737 39,598Accepted income 164,585 163,363

Integration income 446,823 521,765Direct agents commission - -Brokers and pension advisors commission 446,823 521,765Accepted reinsurance commission - -Assigned reinsurance commission - -

Non-pension reinsurance expense 98,202 111,525Medical expenses - -Insurance impairment 101 (4,528)

ADMINISTRATIVE EXPENSES (AE) 1,576,126 1,264,901Remunerations 522,556 300,350 Others 1,053,570 964,551

INVESTMENT INCOME (II) 44,262,556 34,590,555Net realized investment income 4,684,410 4,726,973

Property investments (64,390) 118,983Financial investments 4,748,800 4,607,990

Net unrealized investment income 4,004,389 (1,825,283)Property investments - -Financial investments 4,004,389 (1,825,283)

Net Accrued Investment Income 35,480,900 31,824,900Property investments 3,362,162 3,835,371Financial investments 32,287,065 28,113,245Depreciation 21,841 24,993Management expenses 146,486 98,723

Net Investment Income from Insurance Policies with Single Investment Account (CUI)

- -

Investment impairment (92,857) 136,035TEChNICAL INCOME FROM INSURANCE (CM + II + AE) 11,900,245 13,991,875OThER INCOME AND EXPENDITURE (736,159) (769,707)Other income 58,648 98,369Other expenses 794,807 868,076EXChANGE DIFFERENCES 1,885,878 3,284,812GAIN (LOSS) ON INDEXATION (1,726,364) (1,331,473)NET INCOME ON CONTINUING OPERATIONS BEFORE TAX 11,323,600 15,175,507Net income on discontinued and held-for-sale operations (net of tax) - -Income taxes 1,381,886 2,991,290TOTAL NET INCOME FOR ThE YEAR 9,941,714 12,184,217Income from the revaluation of properties, furniture and equipment - -Income from financial assets 387,993 -Income from cash flow hedging - -Other income taken to equity - -Deferred taxes - -TOTAL OThER COMPREhENSIVE INCOME 387,993 -TOTAL COMPREhENSIVE INCOME 10,329,707 12,184,217

12-31-2016 12-31-2015NET CASh FLOW FROM OPERATIONSRECEIPTS FROM OPERATING ACTIVITIESReceipts from insurance and coinsurance premiums 127,734,343 148,306,687 Receipts from accepted reinsurance premiums - - Refunds of revenues and claims - - Receipts from revenues and claims reinsured 74,361 78,479 Receipts from assigned reinsurance commissions - - Receipts from financial assets at fair value 989,371,438 820,313,277 Receipts from financial assets at amortized cost 762,305,868 480,246,534 Receipts from property 386,325 380,470 Interests and dividends received 1,836,845 1,414,660 Loans and receivables 27,543 227,117 Other receipts from insurance activities 232 17 TOTAL RECEIPTS FROM INSURANCE ACTIVITIES 1,881,736,955 1,450,967,241 PAYMENTS FOR OPERATING ACTIVITIESPayments for direct insurance and coinsurance services 320,777 232,935 Payments of revenues and claims 133,190,056 109,420,791 Payments of direct insurance commissions 379,667 487,687 Payments of accepted reinsurance commissions - - Payments for financial assets at fair value 988,500,097 830,377,009 Payments for financial assets at amortized cost 750,031,225 497,291,250 Payments for property - - Tax expenses 624,265 2,437,154 Administrative expenses 1,424,508 2,247,720 Other payments for insurance activities - - TOTAL PAYMENTS FOR INSURANCE ACTIVITIES 1,874,470,595 1,442,494,546

TOTAL NET CASh FLOW FROM OPERATING ACTIVITIES 7,266,360 8,472,695 CASh FLOW ON INVESTING ACTIVITIESRECEIPTS FROM INVESTING ACTIVITIESReceipts from property, furniture and equipment - - Receipts from investment property 11,225,776 17,291,183 Receipts from intangible assets - -Receipts from assets held for sale - -Receipts from shares in group companies and subsidiaries - -OThER RECEIPTS RELATING TO INVESTING ACTIVITIES - -TOTAL RECEIPTS FROM INVESTING ACTIVITIES 11,225,776 17,291,183 Payments for investing activitiesPayments for property, furniture and equipment 1,126 - Payments for investment property 10,580,332 13,082,477 Payments for intangible assets - - Payments for assets held for sale - - Payments for shares in group companies and subsidiaries - - Other payments related to investing activities - - TOTAL PAYMENTS FOR INVESTING ACTIVITIES 10,581,458 13,082,477

NET CASh FLOW FROM INVESTMENT ACTIVITIES 644,318 4,208,706 CASh FLOW ON FINANCING ACTIVITIESReceipts from financing activitiesReceipts from issuing equity instruments - - Receipts from related company loans 48,545 54,239 Receipts from bank loans - - Capital increases - - Other receipts related to financing activities - - TOTAL RECEIPTS FROM FINANCING ACTIVITIES 48,545 54,239 PAYMENTS FOR FINANCING ACTIVITIESShareholder dividends 7,310,489 11,897,020 Interest paid 678,721 621,052 Capital reduction - - Payments for related company loans 1,417 - Other payments related to financing activities - - TOTAL PAYMENTS FOR FINANCING ACTIVITIES 7,990,627 12,518,072

TOTAL NET CASh FLOW (USED IN) FINANCING ACTIVITIES (7,942,082) (12,463,833) Receipts from exchange variances (35) 8,923 Total increase/decrease in cash and cash equivalents (31,439) 226,491 Initial balance of cash and cash equivalents 404,762 178,271 Final balance of cash and cash equivalents 373,323 404,762 Components of cash and cash equivalents at the end of the yearCash - -Bank balances 373,323 404,762Cash equivalents - -

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As of December 31, 2016 and 2015 STATEMENT OF ChANGES IN NET EQUITY

CAPITAL RESERVES OThER ADJUSTMENTS

ShARESShARE

PREMIUM

MATChING ADJUSTMENT

RESERVES

SINGLE INVESTMENT

ACCOUNT (CUI)

INSURANCE RESERVES

OThER RESERVES

TOTAL RESERVES

RETAINED EARNINGS

NET INCOME FOR ThE

YEAR

TOTAL RETAINED

EARNINGS + NET INCOME

FOR ThE YEAR

TOTAL EQUITY AS

OF 12-31-2016Initial Equity prior to Adjustments 53,644,951 81,549 1,858,165 - - 1,939,714 5,903,500 12,184,217 18,087,717 73,672,382 Adjustments from Previous Years - - - Initial Equity for the Year 53,644,951 81,549 1,858,165 - - 1,939,714 5,903,500 12,184,217 18,087,717 73,672,382 Comprehensive Income - - - - 387,993 387,993 - 9,941,714 9,941,714 10,329,707

Net Income for the Year 387,993 387,993 9,941,714 9,941,714 10,329,707 Total Income (Expenses) Credited (Charged) to Equity

- - -

Deferred Tax - - - Transfers to Retained Earnings - 12,184,217 (12,184,217) - - Shareholder Transactions - - - - - - (6,637,738) (6,637,738) (6,637,738)

Capital Increase (Decrease) - - - (-) Dividend Distribution - 7,310,489 7,310,489 7,310,489 Other Shareholder Transactions - 672,751 672,751 672,751

Reserves (3,517,011) (3,517,011) - - (3,517,011)Transfer of Equity to Net Income - - - FINAL EQUITY FOR ThE YEAR 53,644,951 81,549 (1,658,846) - 387,993 (1,189,304) 11,449,979 9,941,714 21,391,693 73,847,340


CAPITAL RESERVES OThER ADJUSTMENTS

ShARESShARE

PREMIUM

MATChING ADJUSTMENT

RESERVES

SINGLE INVESTMENT

ACCOUNT (CUI)

INSURANCE RESERVES

OThER RESERVES

TOTAL RESERVES

RETAINED EARNINGS

NET INCOME FOR ThE

YEAR

TOTAL RETAINED


FOR ThE YEAR

TOTAL EQUITY AS

OF 12-31-2015Initial Equity prior to Adjustments 53,644,951 81,549 2,876,910 - - 2,958,459 (636,931) 16,994,397 16,357,466 72,960,876 Adjustments from Previous Years - - - Initial Equity for the Year 53,644,951 81,549 2,876,910 - - 2,958,459 (636,931) 16,994,397 16,357,466 72,960,876 Comprehensive Income - - - - - - - 12,184,217 12,184,217 12,184,217

Net Income for the Year - 12,184,217 12,184,217 12,184,217 Total Income (Expenses) Credited (Charged) to Equity

- - -

Deferred Tax - - - Transfers to Retained Earnings - 16,994,397 (16,994,397) - - Shareholder Transactions - - - - - - (10,453,966) (10,453,966) (10,453,966)

Capital Increase (Decrease) - - - (-) Dividend Distribution - 11,897,020 11,897,020 11,897,020 Other Shareholder Transactions - 1,443,054 1,443,054 1,443,054

Reserves (1,018,745) (1,018,745) - - (1,018,745)Transfer of Equity to Net Income - - - FINAL EQUITY FOR ThE YEAR 53,644,951 81,549 1,858,165 - - 1,939,714 5,903,500 12,184,217 18,087,717 73,672,382

239





Compañía de Seguros Generales Consorcio Nacional de Seguros S.A.

We have audited the accompanying financial statements of Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. which comprise the statement of financial position as of December 31, 2016, and the related statements of comprehensive income, changes in equity, and cash flows for the year then ended, and the related notes to the financial statements. Note Nº 6.III has not been audited by us and therefore it is not covered by this report.





An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation and fair presentation of the financial statements of the entity, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we do not express such an opinion. An audit also includes evaluating the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.



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COMPAÑÍA DE SEGUROS GENERALES CONSORCIO NACIONAL DE SEGUROS S.A.Opinion

In our opinion, the financial statements referred to above present fairly in all material aspects the financial position of Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. as of December 31, 2016, and the results of its operations and cash flows for the year then ended, in accordance with instructions and standards for the preparation and presentation of financial information issued by the Chilean Securities and Insurance Supervisor.



Note 25.5 SOAP (Mandatory PAI)


Note 45 Sales by Regions Table








The financial statements of Compañía de Seguros Generales Consorcio Nacional de Seguros S.A. for the year ended December 31, 2015, were audited by other auditors, who issued an unqualified opinion in their report dated February 29, 2016.




241


31-12-2016 31-12-2015TOTAL ASSETS 92,163,866 86,689,368

TOTAL FINANCIAL INVESTMENTS 28,528,509 29,071,082

Cash and cash equivalents 1,615,280 1,694,013

Financial assets at fair value 26,913,229 27,377,069

Financial assets at amortized cost 0 0

Loans 0 0Advances to policyholders 0 0Loans granted 0 0

Investment insurance - Single Investment Account (CUI) 0 0

Investments in group companies 0 0Investments in subsidiary companies 0 0Investment in associated companies 0 0

TOTAL REAL ESTATE INVESTMENTS 3,603,154 2,088,707

Property Investments 3,364,350 0Leasing receivables 0 0Property, furniture and equipment for own use 238,804 2,088,707Property for own use 119,135 1,930,664Furniture and equipment for own use 119,669 158,043

NON-CURRENT ASSETS hELD FOR SALE 0 0

TOTAL INSURANCE ACCOUNTS 54,327,458 48,248,448

Insurance receivables 45,604,075 39,727,347Insured accounts receivable 41,064,493 36,561,780Reinsurance receivables 2,802,036 2,129,215Claims receivable from reinsurers 2,215,375 1,523,074

0 0Non-proportional reinsurance assets 586,661 606,141

0 0Receivables for coinsurance transactions 1,737,546 1,036,352Premiums receivable for coinsurance transactions 966,466 1,036,352Claims receivable for coinsurance transactions 771,080 0

Reinsurer's share of technical reserves 8,723,383 8,521,101Reinsurer's share of current risk reserves 3,467,380 2,563,952Reinsurer's share of pension insurance reserves 0 0

0 00 0

Reinsurer's share of mathematical reserve 0 0Reinsurer's share of private revenue reserves 0 0Reinsurer's share of claims reserves 5,217,734 5,595,526Reinsurer's share of premium insufficiency reserves 19,794 361,623Reinsurer's share of other technical reserves 18,475 0

OThER ASSETS 5,704,745 7,281,131

Intangible assets 1,255,225 1,869,701Goodwill 0Intangible assets other than Goodwill 1,255,225 1,869,701

Taxes receivable 732,725 875,837Receivables for current taxes 56,503 74,673Deferred tax assets 676,222 801,164

OThER ASSETS 3,716,795 4,535,593Receivables from employees 136,460 227,516Brokerage accounts receivable 106,458 72,261Related party receivables 43,011 0Prepaid expenses 218,006 245,055Other assets 3,212,860 3,990,761

31-12-2016 31-12-2015TOTAL EQUITY AND LIABILITIES (B+C) 92,163,866 86,689,368

TOTAL LIABILITIES 70,538,104 67,577,773

FINANCIAL LIABILITIES 2,055,567 3,263,098

NON-CURRENT LIABILITIES hELD FOR SALE 0 0

TOTAL INSURANCE ACCOUNTS 61,732,593 58,768,299

Technical reserves 56,482,783 54,056,702Current risk reserves 38,959,783 34,931,693Pension insurance reserves 0 0

Mathematical reserves 0 0Fund value reserves 0 0Private revenue reserves 0 0Claims reserves 16,026,025 17,774,836Earthquake reserves 144,914 140,960Premium insufficiency reserves 827,300 1,209,213Other technical reserves 524,761 0

Payables on insurance transactions 5,249,810 4,711,597Payables to insured parties 1,722,018 1,259,072Payables on reinsurance transactions 2,826,444 2,504,591Payables on coinsurance transactions 163,099 409,663

Prepaid Income for Reinsurance Operations 538,249 538,271

OThER LIABILITIES 6,749,944 5,546,376

Provisions 0 0

Other liabilities 6,749,944 5,546,376

Taxes payable 1,078,001 496,362Current tax accounts payable 1,078,001 496,362

Payables to related parties 285,639 90,741Brokerage payables 610,426 581,942Payables to employees 674,133 612,150Prepaid income 332,346 617,214Other non-financial liabilities 3,769,399 3,147,967

TOTAL ShAREhOLDER’S EQUITY 21,625,762 19,111,595

Share capital 13,548,584 13,548,584

Reserves 84,731 84,731

Retained earnings 7,992,447 5,478,280Accumulated earnings 4,648,591 4,900,053Net Income for the year 3,343,856 578,227Dividends 0 0

Other adjustments 0 0

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As of December 31, 2016 and 2015STATEMENT OF COMPREhENSIVE INCOME

As of December 31, 2016 and 2015 STATEMENT OF CASh FLOWS

12-31-2016 12-31-2015NET INCOME STATEMENT CONTRIBUTION MARGIN (CM) 11,551,189 9,144,332

Retained premiums 62,959,496 55,906,114Direct premiums 74,013,944 64,930,546Accepted premiums 0 0Assigned premiums 11,054,448 9,024,432

Change in technical reserves 2,609,198 952,860Change in current risk reserves 2,164,637 786,554Change in earthquake reserves 0 0Change in premium insufficiency reserves (58,591) 166,306Change in other technical reserves 503,152 0

Cost of claims 37,847,100 35,241,259Direct claims 43,460,697 29,017,228Assigned claims 5,613,597 (6,224,031)Accepted claims 0 0

Brokerage income 9,713,548 9,151,890Direct agents commission 2,696,444 3,023,196Brokers and pension advisors commission 9,262,615 7,785,158Accepted reinsurance commission 0 0Assigned reinsurance commission 2,245,511 1,656,464

Non-proportional reinsurance expenses 1,195,846 1,430,925

Insurance impairment 42,615 (15,152)

ADMINISTRATIVE EXPENSES (AE) 11,586,513 10,881,136Remunerations 5,128,931 4,236,802Others 6,457,582 6,644,334

INVESTMENT INCOME (II) 2,861,390 858,005

Net realized investment income 196,891 199,270Property investments 0 0Financial investments 196,891 199,270

Net unrealized investment income 1,291,309 (673,522)Property investments 0 0Financial investments 1,291,309 (673,522)

Net Accrued Investment Income 1,373,190 1,332,257Property investments 25,719 0Financial investments 1,360,443 1,342,841Depreciation 0Management expenses 12,972 10,584

Net Investment Income from Insurance Policies with Single Investment Account (CUI)

0 0

Investment impairment 0 0

TEChNICAL INCOME FROM INSURANCE (CM + II + AE) 2,826,066 (878,799)

OThER INCOME AND EXPENDITURE 438,477 369,895

Other income 759,955 737,765Other expenses 321,478 367,870

Exchange differences 9,804 27,042

Gain (loss) on indexed units 870,745 942,070

Net income on continuing operations before tax 4,145,092 460,208

Net income on discontinued and held-for-sale operations (net of tax) 0 0

Income taxes 801,236 (118,019)

TOTAL NET INCOME FOR ThE YEAR 3,343,856 578,227

Income from the revaluation of properties, furniture and equipment 0 0Income from financial assets 0 0Income from cash flow hedging 0 0Other income taken to equity 0 0Deferred taxes 0 0TOTAL OThER COMPREhENSIVE INCOME 0 0

TOTAL COMPREhENSIVE INCOME 3,343,856 578,227

12-31-2016 12-31-2015NET CASh FLOW FROM OPERATIONS RECEIPTS FROM OPERATING ACTIVITIES

Receipts from insurance and coinsurance premiums 82,308,572 72,848,912 Receipts from accepted reinsurance premiums Refunds of revenues and claims 5,825,476 5,248,648 Receipts from revenues and claims reinsured 3,602,846 1,731,187 Receipts from assigned reinsurance commissions Receipts from financial assets at fair value 435,903,811 303,514,713 Receipts from financial assets at amortized cost 0 0Receipts from property Interest and dividends received Loans and receivables Other receipts from insurance activities 88,595 4,490TOTAL RECEIPTS FROM INSURANCE ACTIVITIES 527,729,300 383,347,950

PAYMENTS FOR OPERATING ACTIVITIES Payments for direct insurance and coinsurance services 7,131,155 6,691,082 Payments of revenues and claims 55,960,627 47,328,622Payments of direct insurance commissions 13,485,020 12,687,955 Payments of accepted reinsurance commissions Payments for financial assets at fair value 432,094,219 299,566,341 Payments for financial assets at amortized cost 0 0Payments for property Tax expenses 7,338,028 5,658,454 Administrative expenses 11,736,643 10,479,670 Other payments for insurance activities 0TOTAL PAYMENTS FOR INSURANCE ACTIVITIES 527,745,692 382,412,124

TOTAL NET CASh FLOW FROM OPERATING ACTIVITIES (16,392) 935,826

CASh FLOW ON INVESTING ACTIVITIES Receipts from investing activities

Receipts from property, furniture and equipment 0 Receipts from investment property Receipts from intangible assets Receipts from assets held for sale Receipts from shares in group companies and subsidiaries Other receipts relating to investing activities TOTAL RECEIPTS FROM INVESTING ACTIVITIES 0 0

PAYMENTS FOR INVESTING ACTIVITIES Payments for property, furniture and equipment 73,957 62,186 Payments for investment property Payments for intangible assets Payments for assets held for sale Payments for shares in group companies and subsidiaries Other payments related to investing activities 0TOTAL PAYMENTS FOR INVESTING ACTIVITIES 73,957 62,186

TOTAL NET CASh (USED FOR) INVESTING ACTIVITIES (73,957) (62,186)

CASh FLOW ON FINANCING ACTIVITIES Receipts from financing activities

Receipts from issuing equity instruments Receipts from related company loans Receipts from bank loans 0Capital increases Other receipts related to financing activities TOTAL RECEIPTS FROM FINANCING ACTIVITIES 0 0

PAYMENTS FOR FINANCING ACTIVITIES Shareholder dividends 246,953 Interest paid 21,536 50,656Capital reduction Payments for related company loans Other payments related to financing activities TOTAL PAYMENTS FOR FINANCING ACTIVITIES 21,536 297,609

TOTAL NET CASh FLOW (USED FOR) FINANCING ACTIVITIES (21,536) (297,609)

Changes in exchange rates 33,152 (29)

TOTAL INCREASE/DECREASE IN CASh AND CASh EQUIVALENTS (78,733) 576,002

Initial balance of cash and cash equivalents 1,694,013 1,118,011Final balance of cash and cash equivalents 1,615,280 1,694,013

Components of cash and cash equivalents at the end of the period 1,615,280 1,694,013 Cash 3,932 3,867 Bank balances 1,611,348 1,690,146 Cash equivalents 0 0


243


STATEMENT OF ChANGES IN NET EQUITY

ShARE CAPITAL

ShARE PREMIUM

MATChING ADJUSTMENT

RESERVES

SINGLE INVESTMENT

ACCOUNT (CUI)

INSURANCE RESERVES

OThER RESERVES

TOTAL RESERVES

RETAINED EARNINGS

NET INCOME FOR ThE

YEAR

TOTAL RETAINED


FOR ThE YEAR

TOTAL EQUITY AS

OF 12-31-2016Initial Equity prior to Adjustments 13,548,584 84,731 0 0 0 84,731 4,900,053 578,227 5,478,280 19,111,595Adjustments from Previous Years 0 0 0 0 0 0 0 0 0 0Initial Equity for the Year 13,548,584 84,731 0 0 0 84,731 4,900,053 578,227 5,478,280 19,111,595Comprehensive Income 0 0 0 0 0 0 0 3,343,856 3,343,856 3,343,856

Net Income for the Year 0 0 0 0 0 0 0 3,343,856 3,343,856 3,343,856Total Income (Expenses) Credited (Charged) to Equity

0 0 0 0 0 0 0 0 0 0

Deferred taxes 0 0 0 0 0 0 0 0 0 0Transfers to Retained Earnings 0 0 0 0 0 0 578,227 (578,227) 0 0Shareholder Transactions 0 0 0 0 0 0 (829,689) 0 (829,689) (829,689)

Capital Increase (Decrease) 0 0 0 0 0 0 0 0 0 0(-) Dividend Distribution 0 0 0 0 0 0 0 0 0 0Other Shareholder Transactions 0 0 0 0 0 0 (829,689) 0 (829,689) (829,689)

Reserves 0 0 0 0 0 0 0 0 0Transfer of Equity to Net Income 0 0 0 0 0 0 0 0 0 0FINAL EQUITY FOR ThE YEAR 13,548,584 84,731 0 0 0 84,731 4,648,591 3,343,856 7,992,447 21,625,762

ShARE CAPITAL

ShARE PREMIUM

MATChING ADJUSTMENT

RESERVES

SINGLE INVESTMENT

ACCOUNT (CUI)

INSURANCE RESERVES

OThER RESERVES

TOTAL RESERVES

RETAINED EARNINGS

NET INCOME FOR ThE

YEAR

TOTAL RETAINED


FOR ThE YEAR

TOTAL EQUITY AS

OF 12-31-2015Initial Equity prior to Adjustments 13,548,584 84,731 0 0 0 84,731 4,294,228 789,420 5,083,648 18,716,963Adjustments from Previous Years 0 0 0 0 0 0 0 0 0Initial Equity for the Year 13,548,584 84,731 0 0 0 84,731 4,294,228 789,420 5,083,648 18,716,963Comprehensive Income 0 0 0 0 0 0 0 578,227 578,227 578,227

Net Income for the Year 0 0 0 0 0 0 0 578,227 578,227 578,227Total Income (Expenses) Credited (Charged) to Equity

0 0 0 0 0 0 0 0 0 0

Deferred taxes 0 0 0 0 0 0 0 0 0 0Transfers to Retained Earnings 0 0 0 0 0 0 789,420 (789,420) 0 0Shareholder Transactions 0 0 0 0 0 0 (183,595) 0 (183,595) (183,595)

Capital Increase (Decrease) 0 0 0 0 0 0 0 0 0 0(-) Dividend Distribution 0 0 0 0 0 0 246,953 0 246,953 246,953Other Shareholder Transactions 0 0 0 0 0 0 63,358 0 63,358 63,358

Reserves 0 0 0 0 0 0 0 0 0 0Transfer of Equity to Net Income 0 0 0 0 0 0 0 0 0 0FINAL EQUITY FOR ThE YEAR 13,548,584 84,731 0 0 0 84,731 4,900,053 578,227 5,478,280 19,111,595

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CF CAYMAN LTD




Consorcio Financiero S.A.,

As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary CF Cayman Ltd., and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and CF Cayman Ltd. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for CF Cayman Ltd that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.

This report complies with the requirements of General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, and only relates to Consorcio Financiero S.A. It is only intended for Senior Management and the Chilean Securities and Insurance Supervisor, and it should not be used by any other party.



245




STATEMENT OF CASh FLOWS

STATEMENT OF NET INCOME

12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 54,113 1,907Other non-financial assets - 468,954Other financial assets 7,907,377 9,586,713TOTAL ASSETS 7,961,490 10,057,574

ShAREhOLDERS EQUITY AND LIABILITIESLIABILITIES

Current tax liabilitiesOther non-financial liabilities 4,072TOTAL LIABILITIES 4,072 -

EQUITYShare capital 6,607,528 6,607,528Retained earnings 1,049,690 3,149,846Other reserves 300,200 300,200TOTAL EQUITY 7,957,418 10,057,574

TOTAL LIABILITIES AND EQUITY 7,961,490 10,057,574

12-31-2016ThCh$

12-31-2015ThCh$

Revenue from ordinary activities 158,534 1,392,234GROSS MARGIN 158,534 1,392,234Other income - -Administration expenses (9,321) (5,106)Other expenses, by function - -NET OPERATING INCOME 149,213 1,387,128Share of net income of associates and joint ventures accounted for using the equity methodExchange differences (565,547) 1,863,664Indexation adjustmentsNET INCOME BEFORE TAX (416,334) 3,250,792Income tax expenseNET INCOME FROM CONTINUING OPERATIONS (416,334) 3,250,792Net income from discontinued operations - -NET INCOME (LOSS) (416,334) 3,250,792Net income (loss) attributable to owners of the parent company

(416,334) 3,250,792

NET INCOME (LOSS) (416,334) 3,250,792

12-31-2016ThCh$

12-31-2015ThCh$

CASh FLOW FROM OPERATIONSRECEIPTS FROM OPERATING ACTIVITIESReceipts from royalties, installments, commissions and other operating revenue - - Receipts from other operating activities 1,522,305 9,658,129 RECEIPTS FROM OPERATING ACTIVITIES 1,522,305 9,658,129

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (5,215) (5,047)Payments arising from contracts held for brokerage or trading - - Payments for other operating activities - (840,945)PAYMENTS FOR OPERATING ACTIVITIES (5,215) (845,992)

NET CASh FLOW ON OPERATIONSDividends received 208,167 814,064 Income taxes paid (refunded)NET CASh FLOW ON OPERATIONS 208,167 814,064

NET CASh FLOW FROM OPERATING ACTIVITIES 1,725,257 9,626,201

CASh FLOW (USED IN) FINANCING ACTIVITIES

Loan repayments - - Dividends paid (1,683,822) (9,650,880)NET CASh FLOW (USED IN) FINANCING ACTIVITIES (1,683,822) (9,650,880)EFFECT OF EXChANGE RATE FLUCTUATIONS ON CASh AND CASh EQUIVALENTS 10,771 (11,993) NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS 52,206 (36,672)CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 1,907 38,579 CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 54,113 1,907

246

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AP.


ShARE CAPITALThCh$

EXChANGE VARIANCES ON CONVERSION

RESERVESThCh$

FINANCIAL ASSET REVALUATION

RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$

EQUITY ATTRIBUTABLE

TO ShAREhOLDERS OF ThE PARENT

COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 6,607,528 300,200 - - 300,200 3,149,846 10,057,574Capital increaseNet income - - - - - (416,334) (416,334)Other comprehensive income - - - - - - -TOTAL COMPREhENSIVE INCOME - - - - - (416,334) (416,334)Capital increaseIncrease (decrease) for other contributions by the owners

- - - - - - -

Distribution to shareholders - - - - - (1,683,822) (1,683,822)TOTAL ChANGES IN EQUITY - - - - - (2,100,156) (2,100,156)CLOSING BALANCE AS OF DECEMBER 31, 2016 6,607,528 300,200 - - 300,200 1,049,690 7,957,418

ShARE CAPITALThCh$


RESERVESThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$

EQUITY ATTRIBUTABLE

TO ShAREhOLDERS OF ThE PARENT

COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 6,607,528 300,200 - - 300,200 9,549,934 16,457,662Capital increaseNet income - - - - - 3,250,792 3,250,792Other comprehensive income - - - - - - -TOTAL COMPREhENSIVE INCOME - - - - - 3,250,792 3,250,792Capital increaseIncrease (decrease) for other contributions by the owners

- - - - - - -

Distribution to shareholders - - - - - (9,650,880) (9,650,880)TOTAL ChANGES IN EQUITY - - - - - (6,400,088) (6,400,088)CLOSING BALANCE AS OF DECEMBER 31, 2015 6,607,528 300,200 - - 300,200 3,149,846 10,057,574

STATEMENT OF ChANGES IN EQUITY As of December 31, 2016 and 2015

CF CAYMAN LTD

247

CF INVERSIONES PERÚ S.A.C.





As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary CF Inversiones Peru S.A.C. and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and CF Inversiones Peru S.A.C. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for CF Inversiones Peru S.A.C. that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.




248

07 CH

AP.


As of December 31, 2016 and 2015 As of December 31, 2016 and 2015STATEMENTS OF FINANCIAL POSITION ESTADO DE RESULTADOS


12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 22 1,718,327 Current tax assets 3,834 - Other non-financial assets 45,407 - Other financial assets 1,395,301 - Investments accounted for using the equity method 41,242,084 36,226,562 TOTAL ASSETS 42,686,648 37,944,889


Current tax liabilities - 201,073 TOTAL LIABILITIES - 201,073

EQUITY

Share capital 35,696,584 37,226,770 Retained earnings 2,644,435 517,046 Other reserves 4,345,629 - EQUITY ATTRIBUTABLE TO OWNERS OF ThE PARENT COMPANY 42,686,648 37,743,816

Minority interests - -

TOTAL EQUITY 42,686,648 37,743,816


12-31-2016ThCh$

12-31-2015ThCh$

Revenue from ordinary activities 81,128 -GROSS MARGIN 81,128 -Other income 150,809Distribution costs (105,900)Other expenses, by function - (11,100)NET OPERATING INCOME (24,772) 139,709Share of net income of associates and joint ventures accounted for using the equity method

2,190,541 -

Exchange differences (28,679) 578,410NET INCOME BEFORE TAX 2,137,090 718,119Income tax expense 11,552 (201,073)NET INCOME FROM CONTINUING OPERATIONS 2,148,642 517,046NET INCOME 2,148,642 517,046Net income (loss) attributable to owners of the parent company

2,148,642 517,046

NET INCOME 2,148,642 517,046

COMPONENTS OF OThER COMPREhENSIVE INCOME, BEFORE TAXESGain (loss) from exchange differences on translation of foreign operations, before tax

(1,551,439) -

INCOME TAX RELATED TO COMPONENTS OF OThER COMPREhENSIVE INCOMEHeld for sale in other comprehensive income 4,345,629 -OThER COMPREhENSIVE INCOME 2,794,190 -TOTAL COMPREhENSIVE INCOME 4,942,832 -

COMPREhENSIVE INCOME ATTRIBUTABLE TO:Owners of the parent company 4,942,832 -Minority interests - -TOTAL COMPREhENSIVE INCOME 4,942,832 -

12-31-2016ThCh$

12-31-2015ThCh$

CASh FLOW FROM OPERATIONSRECEIPTS FROM OPERATING ACTIVITIESReceipts from royalties, installments, commissions and other operating revenue 101,133 150,809TOTAL RECEIPTS FROM OPERATING ACTIVITIES 101,133 150,809

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (1,775,043) (337,420)TOTAL PAYMENTS FOR OPERATING ACTIVITIES (1,775,043) (337,420)

Income taxes paid (refunded) (44,396) -NET CASh FLOW ON OPERATIONS (44,396) -

NET CASh FLOW FROM (USED FOR) OPERATING ACTIVITIES (1,718,306) (186,611)

CASh FLOW FROM (USED FOR) INVESTING ACTIVITIES

Cash flows used to obtain control of subsidiaries or other businesses - (36,226,562)

NET CASh FLOW FROM (USED FOR) INVESTING ACTIVITIES - (36,226,562)

CASh FLOW FROM (USED IN) FINANCING ACTIVITIES

Receipts from share issues - 38,131,500

NET CASh FLOW (USED IN) FINANCING ACTIVITIES - 38,131,500

EFFECT OF EXChANGE RATE FLUCTUATIONS ON CASh AND CASh EQUIVALENTS 1NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS (1,718,305) 1,718,327CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 1,718,327 -CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 22 1,718,327

CF INVERSIONES PERÚ S.A.C.

249


ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGSThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 37,226,770 - - - 517,046 37,743,816

CAPITAL INCREASE - - - - - - Net income for the year - - - - 2,148,642 2,148,642 Other comprehensive income - (1,551,439) 4,345,629 2,794,190 - 2,794,190 TOTAL COMPREhENSIVE INCOME - (1,551,439) 4,345,629 2,794,190 2,148,642 4,942,832 Capital increase - - - - - - Dividends - - - - - - Distribution to shareholders - - - - - - Other increases (decreases) (1,530,186) 1,551,439 - 1,551,439 (21,253) -

TOTAL ChANGES FOR ThE YEAR (1,530,186) - 4,345,629 4,345,629 2,127,389 4,942,832 CLOSING BALANCE AS OF DECEMBER 31, 2016 35,696,584 - 4,345,629 4,345,629 2,644,435 42,686,648

ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGSThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 - - - - - -

CAPITAL INCREASE - - - - - - Net income for the year - - - - 517,046 517,046 Other comprehensive income - - - - - - TOTAL COMPREhENSIVE INCOME - - - - 517,046 517,046 Capital increase 37,226,770 - - - - 37,226,770 Dividends - - - - - - Distribution to shareholders - - - - - - Other increases (decreases) - - - - - -

TOTAL ChANGES FOR ThE YEAR 37,226,770 - - - 517,046 37,743,816 CLOSING BALANCE AS OF DECEMBER 31, 2015 37,226,770 - - - 517,046 37,743,816

250

07 CH

AP.


CONSORCIO INVERSIONES FINANCIERAS SPA





As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary Consorcio Inversiones Financieras SpA. and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and Consorcio Inversiones Financieras SpA. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for Consorcio Inversiones Financieras SpA. that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.




251

As of December 31, 2016 and 2015 As of December 31, 2016 and 2015 STATEMENTS OF FINANCIAL POSITION STATEMENT OF NET INCOME


12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 891 1,728Related party receivables - -Deferred tax assets 2,198 1,076Investments accounted for using the equity method 2,865 2,868TOTAL ASSETS 5,954 5,672


Related party payables 7,536 6,292Other non-financial liabilities 664 1,255TOTAL LIABILITIES 8,200 7,547

EQUITY

Share capital 2,032 2,032Retained earnings (4,278) (3,907)TOTAL EQUITY (2,246) (1,875)

TOTAL LIABILITIES AND EQUITY 5,954 5,672

12-31-2016ThCh$

12-31-2015ThCh$

Revenue from ordinary activities 166 -Cost of sales - -GROSS MARGIN 166 -Administrative expenses (1,340) (2,507)Other expenses, by function (244) (112)NET OPERATING INCOME (1,418) (2,619)Share of net income of associates and joint ventures accounted for using the equity method

- -

Indexation adjustments (74) (42)NET INCOME (LOSS) BEFORE TAX (1,492) (2,661)Income tax expense 1,121 639NET INCOME (LOSS) FROM CONTINUING OPERATIONS (371) (2,022)Net income from discontinued operations - -NET INCOME (LOSS) (371) (2,022)Net income (loss) attributable to owners of the parent company (371) (2,022)NET INCOME (LOSS) (371) (2,022)

12-31-2016ThCh$

12-31-2015ThCh$

CASh FLOW FROM OPERATIONS

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (2,005) (2,502)TOTAL PAYMENTS FOR OPERATING ACTIVITIES (2,005) (2,502)

NET CASh FLOW ON OPERATIONSDividends received 168 25Net cash flow on operations 168 25

NET CASh FLOWS (USED FOR) OPERATING ACTIVITIES (1,837) (2,477)


Cash flows used to obtain control of subsidiaries or other businesses - (383)

CASh FLOW FROM (USED FOR) INVESTING ACTIVITIES - (383)


Loans from related companies 1,000 4,180Loan repayments - -

NET CASH FLOWS FROM FINANCING ACTIVITIES 1,000 4,180

NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS (837) 1,320CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 1,728 408CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 891 1,728

252

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AP.


CONSORCIO INVERSIONES FINANCIERAS SPA


ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 2,032 - - - (3,907) (1,875)Capital increaseNet Income (loss) - - - - (371) (371)Other comprehensive income - - - - - -TOTAL COMPREhENSIVE INCOME - - - - (371) (371)Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - - -TOTAL ChANGES IN EQUITY - - - - (371) (371)CLOSING BALANCE AS OF DECEMBER 31, 2016 2,032 - - - (4,278) (2,246)

ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 2,032 - - - (1,885) 147Capital increaseNet Income (loss) - - - - (2,022) (2,022)Other comprehensive income - - - - - -TOTAL COMPREhENSIVE INCOME - - - - (2,022) (2,022)Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - - -TOTAL ChANGES IN EQUITY - - - - (2,022) (2,022)CLOSING BALANCE AS OF DECEMBER 31, 2015 2,032 - - - (3,907) (1,875)

253






As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary Consorcio Services S.A. and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and Consorcio Services S.A. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for Consorcio Services S.A. that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.




254

07 CH

AP.


As of December 31, 2016 and 2015 As of December 31, 2016 and 2015 STATEMENTS OF FINANCIAL POSITION STATEMENT OF CASh FLOWS

STATEMENT OF NET INCOME As of December 31, 2016 and 2015

12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 156,961 43,383Current tax assets 37,254 26,745Related party receivables 94,298 289,843Other non-financial assets 87,156 327,461Other financial assets 324,946 -Deferred tax assets 5,181 3,071Property, plant and equipment 937 1,163TOTAL ASSETS 706,733 691,666


Related party payables 351,933 339,343Current tax liabilities 39,704 95,280Other non-financial liabilities 45,406 131,519Other financial liabilities - -Employee benefits provision 20,316 12,798TOTAL LIABILITIES 457,359 578,940

EQUITY

Share capital 269 269 Retained earnings 249,105 112,457

TOTAL EQUITY 249,374 112,726


12-31-2016ThCh$

12-31-2015ThCh$

Revenue from ordinary activities - -GROSS INCOME - -Other income 647,296 452,300Administrative expenses (494,455) (240,455)Other expenses, by function (12,713) (15,256)NET OPERATING INCOME 140,128 196,589Indexation adjustments 32,017 179NET INCOME BEFORE TAX 172,146 196,768Income tax expense (35,498) (43,169)NET INCOME FROM CONTINUING OPERATIONS 136,648 153,599NET INCOME 136,648 153,599Net income (loss) attributable to owners of the parent company 136,648 153,599NET INCOME 136,648 153,599

12-31-2016ThCh$

12-31-2015ThCh$


RECEIPTS FROM OPERATING ACTIVITIESReceipts from sales of goods and services 1,599,012 289,548Receipts from financial assets at fair value 227,645 91,528TOTAL RECEIPTS FROM OPERATING ACTIVITIES 1,826,657 381,076

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (823,965) (58,919)Payments on contracts for brokering or trading (415,405) (91,268)Payments to and on behalf of employees (371,300) (192,777)TOTAL PAYMENTS FOR OPERATING ACTIVITIES (1,610,670) (342,964)

NET CASh FLOW ON OPERATIONSDividends receivedIncome taxes paid (refunded) (102,408) (9,793)NET CASh FLOW ON OPERATIONS (102,408) (9,793)

NET CASh FLOWS FROM OPERATING ACTIVITIES 113,579 28,319


Payments to acquire equity or debt instruments in other entities - -Acquisitions of property, plant and equipment (702)NET CASh FLOW (USED FOR) INVESTING ACTIVITIES - (702)


Loans from related companies 10,000Loan repayments (10,062)Loans to related companies -Other cash receipts (payments) -

NET CASh FLOW (USED IN) FINANCING ACTIVITIES - (62)

NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS 113,579 27,555

CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 43,383 15,828

CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 156,961 43,383


255


ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 269 - - - 112,457 112,726Net Income (loss) - - - - 136,648 136,648TOTAL COMPREhENSIVE INCOME - - - - 136,648 136,648TOTAL ChANGES IN EQUITY - - - - 136,648 136,648CLOSING BALANCE AS OF DECEMBER 31, 2016 269 - - - 249,105 249,374

ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 269 - - - (41,142) (40,873)Net Income (loss) - - - - 153,599 153,599 TOTAL COMPREhENSIVE INCOME - - - - 153,599 153,599TOTAL ChANGES IN EQUITY - - - - 153,599 153,599CLOSING BALANCE AS OF DECEMBER 31, 2015 269 - - - 112,457 112,726

256

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AP.


CONSORCIO INVERSIONES LTDA.





As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary Consorcio Inversiones Ltda. and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and Consorcio Inversiones Ltda. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for Consorcio Inversiones Ltda. that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.




257


STATEMENT OF CASh FLOWS

12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 12,444 18,084Current tax assets 11,506 -Related party receivables 4,497,028 3,993,938Other non-financial assets 2,483,627 3,043,847Other financial assets - -Investments accounted for using the equity method 61,335,502 61,423,038Goodwill 4,653,726 4,653,726TOTAL ASSETS 72,993,833 73,132,633


Related party payables 795,605 195,228Current tax liabilities - 8,738Other non-financial liabilities 658 149,132TOTAL LIABILITIES 796,263 353,098

EQUITY

Share capital 77,777,985 77,777,985Retained earnings 17,500,815 15,477,154Other reserves (23,081,230) (20,475,604)TOTAL EQUITY 72,197,570 72,779,535


12-31-2016ThCh$

12-31-2015ThCh$

Revenue from ordinary activities - 3,520GROSS MARGIN - 3,520Other income - -Administrative expenses (31,442) (28,452)Other expenses, by function (20,377) (228)NET OPERATING INCOME (51,819) (25,160)Share of net income of associates and joint ventures accounted for using the equity method

8,045,533 9,882,078

Exchange differences 114,777 155,818Indexation adjustments 880 734NET INCOME BEFORE TAX 8,109,371 10,013,470Income tax expense (11,125) (55,135)NET INCOME FROM CONTINUING OPERATIONS 8,098,246 9,958,335Net income from discontinued operations - -NET INCOME 8,098,246 9,958,335Net income attributable to owners of the parent company 8,098,246 9,958,335NET INCOME 8,098,246 9,958,335

12-31-2016ThCh$

12-31-2015ThCh$


RECEIPTS FROM OPERATING ACTIVITIESReceipts from royalties, installments, commissions and other operating revenue - 256,321TOTAL RECEIPTS FROM OPERATING ACTIVITIES - 256,321

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (179,910) (22,809)TOTAL PAYMENTS FOR OPERATING ACTIVITIES (179,910) (22,809)

NET CASh FLOW ON OPERATIONSDividends received 6,087,660 9,907,000Income taxes paid (refunded) (30,534) (62,543)NET CASh FLOW ON OPERATIONS 6,057,126 9,844,457

NET CASh FLOWS FROM OPERATING ACTIVITIES 5,877,216 10,077,969

CASh FLOW (USED IN) FINANCING ACTIVITIES

Loans from related companies 191,728 (171,876)Dividends paid (6,074,584) (9,907,000)

NET CASh FLOW (USED IN) FINANCING ACTIVITIES (5,882,856) (10,078,876)

NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS (5,640) (908)CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 18,084 18,991CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 12,444 18,084


258

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AP.


CONSORCIO INVERSIONES LTDA.

ShARE CAPITALThCh$

FINANCIAL ASSET REVALUATION RESERVES

ThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 77,777,985 - (20,475,604) (20,475,604) 15,477,154 72,779,535Capital increaseNet Income (loss) - - - - 8,098,246 8,098,246Other comprehensive income - - (2,605,627) (2,605,627) - (2,605,627)TOTAL COMPREhENSIVE INCOME - - (2,605,627) (2,605,627) 8,098,246 5,492,619Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - (6,074,584) (6,074,584)Other increases (decreases) - - - - - -TOTAL ChANGES IN EQUITY - - (2,605,627) (2,605,627) 2,023,662 (581,965)CLOSING BALANCE AS OF DECEMBER 31, 2016 77,777,985 - (23,081,231) (23,081,231) 17,500,816 72,197,570

ShARE CAPITALThCh$

FINANCIAL ASSET REVALUATION RESERVES

ThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 77,777,985 - (19,627,264) (19,627,264) 15,425,819 73,576,540Capital increaseNet Income (loss) - - - - 9,958,335 9,958,335Other comprehensive income - - (848,340) (848,340) - (848,340)TOTAL COMPREhENSIVE INCOME - - (848,340) (848,340) 9,958,335 9,109,995Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - (9,907,000) (9,907,000)Other increases (decreases) - - - - - -TOTAL ChANGES IN EQUITY - - (848,340) (848,340) 51,335 (797,005)CLOSING BALANCE AS OF DECEMBER 31, 2015 77,777,985 - (20,475,604) (20,475,604) 15,477,154 72,779,535


259

CONSORCIO INVERSIONES DOS LTDA.





As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary Consorcio Inversiones Dos Ltda. and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and Consorcio Inversiones Dos Ltda. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for Consorcio Inversiones Dos Ltda. that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.




260

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AP.


As of December 31, 2016 and 2015 As of December 31, 2016 and 2015STATEMENTS OF FINANCIAL POSITION STATEMENT OF NET INCOME

STATEMENT OF CASh FLOWS As of December 31, 2016 and 2015

12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 70,134 8,954Current tax assets - -Other non-financial assets 4,619,299 3,886,127Other financial assets - 5,238,881Investments accounted for using the equity method 124,414,769 104,417,993Goodwill (3,131,449) 16,504TOTAL ASSETS 125,972,754 113,568,459


Related party payables 462,758 -Current tax liabilities 20,982 526,579Other non-financial liabilities 662 70,489TOTAL LIABILITIES 484,402 597,068

EQUITY

Share capital 79,874,168 79,874,168Retained earnings 48,402,929 44,557,402Other reserves (2,788,745) (11,460,179)TOTAL EQUITY 125,488,352 112,971,391


12-31-2016ThCh$

12-31-2015ThCh$

Revenue from ordinary activities 57,067 1,886,867GROSS MARGIN 57,067 1,886,867Other income - -Administrative expenses (16,161) (3,712)Other expenses, by function (12,078) -NET OPERATING INCOME 28,828 1,883,155Share of net income of associates and joint ventures accounted for using the equity method

15,369,790 12,993,041

Exchange differences (651) 1,497Indexation adjustments 681 (1,025)NET INCOME BEFORE TAX 15,398,648 14,876,668Income tax expense 46,880 (557,181)NET INCOME FROM CONTINUING OPERATIONS 15,445,528 14,319,487Net income from discontinued operations - -NET INCOME 15,445,528 14,319,487Net income (loss) attributable to owners of the parent company

15,445,528 14,319,487

NET INCOME 15,445,528 14,319,487

12-31-2016ThCh$

12-31-2015ThCh$


RECEIPTS FROM OPERATING ACTIVITIESReceipts from royalties, installments, commissions and other operating revenue 105,351,947 8,946,826TOTAL RECEIPTS FROM OPERATING ACTIVITIES 105,351,947 8,946,826

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (86,030) (2,478)Payments on contracts for brokering or trading (100,056,000) (9,140,000)TOTAL PAYMENTS FOR OPERATING ACTIVITIES (100,142,030) (9,142,478)

NET CASh FLOW ON OPERATIONSDividends received 6,458,621 1Income taxes paid (refunded) (458,037) 132,780NET CASh FLOW ON OPERATIONS 6,000,584 132,781

NET CASh FLOWS FROM (USED FOR) OPERATING ACTIVITIES 11,210,501 (62,871)


Cash flows used to obtain control of subsidiaries or other businesses - -

NET CASh FLOW FROM (USED FOR) INVESTING ACTIVITIES - -


Loans from related companies 1,905,679 -Loan repayments (1,455,000) -Dividends paid (11,600,000) -

NET CASh FLOW (USED IN) FINANCING ACTIVITIES (11,149,321) -

NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS 61,180 (62,871)CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 8,954 71,825CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 70,134 8,954

CONSORCIO INVERSIONES DOS LTDA.

261


ShARE CAPITALThCh$

FINANCIAL ASSET

REVALUATION RESERVES

ThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 79,874,167 (11,460,179) - (11,460,179) 44,557,403 112,971,391Capital increaseNet Income (loss) - - - - 15,445,528 15,445,528Other comprehensive income - 8,671,434 - 8,671,434 - 8,671,434TOTAL COMPREhENSIVE INCOME - 8,671,434 - 8,671,434 15,445,528 24,116,962Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - (11,600,000) (11,600,000)TOTAL ChANGES IN EQUITY - 8,671,434 - 8,671,434 3,845,528 12,516,962 CLOSING BALANCE AS OF DECEMBER 31, 2016 79,874,167 (2,788,745) - (2,788,745) 48,402,931 125,488,353

ShARE CAPITALThCh$

FINANCIAL ASSET

REVALUATION RESERVES

ThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 79,874,167 (4,440,418) - (4,440,418) 30,237,916 105,671,665Capital increaseNet Income (loss) - - - - 14,319,487 14,319,487Other comprehensive income - (7,019,761) - (7,019,761) - (7,019,761)TOTAL COMPREhENSIVE INCOME - (7,019,761) - (7,019,761) 14,319,487 7,299,726Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - - -TOTAL ChANGES IN EQUITY - (7,019,761) - (7,019,761) 14,319,487 7,299,726CLOSING BALANCE AS OF DECEMBER 31, 2015 79,874,167 (11,460,179) - (11,460,179) 44,557,403 112,971,391

262

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INVERSIONES CONTINENTAL BÍO BÍO SPA



Inversiones Continental Bío Bío SpA.

We have audited the accompanying consolidated financial statements of Inversiones Continental Bío Bío SpA. and subsidiary, which comprise the consolidated statements of financial position as of December 31, 2016 and 2015, and the consolidated statements of comprehensive income, changes in equity and cash flows for the year ended December 31, 2016 and the 55-day period ended December 31, 2015, and the related notes to the consolidated financial statements.


Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”). This responsibility includes the design, implementation, and maintenance of relevant internal controls for the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.


Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in Chile. Those principles require that we plan and perform our work to obtain reasonable assurance that the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement in the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant for the preparation and fair presentation of the consolidated financial statements of the entity in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we do not express such an opinion. An audit also includes evaluating the accounting policies used and the reasonableness of significant accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements.


DeloitteAuditores y Consultores Limitada

Rosario Norte 407Chilean ID Number: 80,276,200-3

Las Condes, Santiago ChileTel: (56) 227 297 000Fax: (56) 223 749 177

[email protected] www.deloitte.cl

263

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material aspects, the financial position of Inversiones Continental Bío Bío SpA. and subsidiary as of December 31, 2016 and 2015, and the results of their operations and their cash flows for the year ended December 31, 2016 and the 55-day period ended December 31, 2015, in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”).

Other matters

As indicated in Note 1, the company is developing and constructing a Hydroelectric Power Station at El Pinar.

February 22, 2017

264

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INVERSIONES CONTINENTAL BÍO BÍO SPA



12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 220,957 100Current tax assets 2,591 -Related party receivables 747,288 -Deferred tax assets 86,088 5,540Intangible assets other than goodwill 254,415 -Goodwill 9 9Property, plant and equipment 190 -TOTAL ASSETS 1,311,538 5,649


Related party payables 411,786 12,976Current tax liabilities 544 -Other non-financial liabilities 3,951 346Other provisions - 7,176TOTAL LIABILITIES 416,281 20,498

EQUITY

Share capital 1,003,500 109Retained earnings (108,243) (14,958)EQUITY ATTRIBUTABLE TO OWNERS OF ThE PARENT COMPANY 895,257 (14,849)

TOTAL EQUITY 895,257 (14,849)

TOTAL LIABILITIES AND EQUITY 1,311,538 5,649

12-31-2016ThCh$

12-31-2015ThCh$

Other income 249 -Administrative expenses (182,045) (20,498)Other gains (losses) 4,442 -NET OPERATING INCOME (177,354) (20,498)Exchange differences 3,521 -NET INCOME BEFORE TAX (173,833) (20,498)Income tax expense 80,548 5,540NET INCOME FROM CONTINUING OPERATIONS (93,285) (14,958)Net income from discontinued operationsNET INCOME (93,285) (14,958)Net income (loss) attributable to owners of the parent company

(93,285) (14,958)

NET INCOME (93,285) (14,958)OThER COMPREhENSIVE INCOME - -TOTAL COMPREhENSIVE INCOME (93,285) (14,958)

COMPREhENSIVE INCOME ATTRIBUTABLE TOShareholders of the parent company (93,285) (14,958)Minority interests - -TOTAL COMPREhENSIVE INCOME (93,285) (14,958)

12-31-2016ThCh$

12-31-2015ThCh$


RECEIPTS FROM OPERATING ACTIVITIESReceipts from other operating activities (182,045) (12,976)TOTAL RECEIPTS FROM OPERATING ACTIVITIES (182,045) (12,976)

NET CASh FLOWS (USED FOR) OPERATING ACTIVITIES (182,045) (12,976)


Loans from related companies 614,774 13,076Loans to related companies (268,490) -Acquisitions of property, plant and equipment (250) -Acquisitions of intangible assets (218,144) -Other cash receipts (payments) 10,962 -

NET CASH FLOW FROM (USED IN) INVESTING ACTIVITIES 138,852 13,076


Receipts from share issues 264,050 -

NET CASh FLOW FROM FINANCING ACTIVITIES 264,050 -

NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS 220,857 100CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 100 –CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 220,957 100

265


ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 109 - - - (14,958) (14,849)CAPITAL INCREASENet income for the year - (93,285) (93,285)Other comprehensive income - - - - -Total comprehensive income - - - - (93,285) (93,285)Capital increase 1,003,391 - 1,003,391Dividends -Distribution to shareholders - -Other increases (decreases) - - - - - -TOTAL ChANGES FOR ThE YEAR 1,003,391 - - - (93,285) 910,106 CLOSING BALANCE AS OF DECEMBER 31, 2016 1,003,500 - - - (108,243) 895,257

ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 109 - - - - 109CAPITAL INCREASENet income for the year - (14,958) (14,958)Other comprehensive income - - - -TOTAL COMPREhENSIVE INCOME - - - - (14,958) (14,958)Capital increase - - -Dividends -Distribution to shareholders - -Other increases (decreases) - - -TOTAL ChANGES FOR ThE YEAR - - - - (14,958) (14,958)CLOSING BALANCE AS OF DECEMBER 31, 2015 109 - - - (14,958) (14,849)

266

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AP.


INMOBILIARIA PUNTA PITE S.A.



12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCash and cash equivalents 3,614 910Other non-financial assets - -Other financial assets 54,219 55,119Deferred tax assets 104,132 94,908TOTAL ASSETS 161,965 150,937


Related party payables - - Other non-financial liabilities - - TOTAL LIABILITIES - -

EQUITY

Share capital 467,565 467,565Retained earnings (305,600) (316,628)TOTAL EQUITY 161,965 150,937


12-31-2016ThCh$

12-31-2015ThCh$

Revenue from ordinary activities 2,223 1,941GROSS MARGIN 2,223 1,941Administrative expenses (418) (270)NET OPERATING INCOME 1,805 1,671Indexation adjustments - -NET INCOME BEFORE TAX 1,805 1,671Income tax expense 9,223 3,660NET INCOME FROM CONTINUING OPERATIONS 11,028 5,331Net income from discontinued operations - -NET INCOME 11,028 5,331Net income attributable to owners of the parent company 11,028 5,331 NET INCOME 11,028 5.33

12-31-2016ThCh$

12-31-2015ThCh$


RECEIPTS FROM OPERATING ACTIVITIESReceipts from royalties, installments, commissions and other operating revenue - - Receipts from other operating activities - - TOTAL RECEIPTS FROM OPERATING ACTIVITIES - -

PAYMENTS FOR OPERATING ACTIVITIESPayments to suppliers for goods and services (417) (270)Payments on contracts for brokering or trading - -TOTAL PAYMENTS FOR OPERATING ACTIVITIES (417) (270)

NET CASh FLOW ON OPERATIONSDividends received - - Income taxes paid (refunded) - - NET CASh FLOW ON OPERATIONS - -

NET CASh FLOWS (USED FOR) OPERATING ACTIVITIES (417) (270)


Other receipts (payments) 3,122 -

NET CASh FLOW FROM INVESTING ACTIVITIES 3,122 -

NET CASh FLOW FROM (USED IN) FINANCING ACTIVITIES - -

NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS 2,704 (270)CASh AND CASh EQUIVALENTS AT ThE START OF ThE YEAR 910 1,180CASh AND CASh EQUIVALENTS AT ThE END OF ThE YEAR 3,614 910

267


ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2016 467,565 - - - (316,628) 150,937Capital increaseNet Income (loss) - - - - 11,028 11,028Other comprehensive income - - - - - -TOTAL COMPREhENSIVE INCOME - - - - 11,028 11,028Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - - -TOTAL ChANGES IN EQUITY - - - - 11,028 11,028 CLOSING BALANCE AS OF DECEMBER 31, 2016 467,565 - - - (305,600) 161,965

ShARE CAPITALThCh$


RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVESThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

OPENING BALANCE AS OF JANUARY 1, 2015 467,565 - - - (321,959) 145,606Capital increaseNet Income (loss) - - - - 5,331 5,331Other comprehensive income - - - - - -TOTAL COMPREhENSIVE INCOME - - - - 5,331 5,331Capital increase - - - - - -Increase (decrease) for other contributions by the owners - - - - - -Distribution to shareholders - - - - - -TOTAL ChANGES IN EQUITY - - - - 5,331 5,331 CLOSING BALANCE AS OF DECEMBER 31, 2015 467,565 - - - (316,628) 150,937

268

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AP.


INMOBILIARIA LOTE 18





As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary Inmobiliaria Lote 18 S.A. and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and Inmobiliaria Lote 18 S.A. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for Inmobiliaria Lote 18 S.A. that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.




269

12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCURRENT ASSETSCash and cash equivalents 69,332 126,349Trade receivables -Other current financial assets 5,773TOTAL CURRENT ASSETS 69,332 132,122

NON-CURRENT ASSETS

Related party receivables, non-current 243,510 42,773Inventories 164,982 164,982Other financial assets, non-current 3,901 5,773Deferred tax assets - 14,229TOTAL NON-CURRENT ASSETS 412,393 221,984

TOTAL ASSETS 481,725 354,106

STATEMENT OF CASh FLOWS - DIRECT METhOD For the years ended December 31, 2016 and 2015



For the years ended December 31, 2016 and 2015 CLASSIFIED STATEMENT OF FINANCIAL POSITION

STATEMENT OF COMPREhENSIVE INCOME

STATEMENT OF INCOME BY FUNCTION12-31-2016

ThCh$12-31-2015

ThCh$Revenue from ordinary activities - -Cost of sales - -Gross margin - -Administrative expenses (145,595) (189,978)Indexation adjustments (11,519) (59,705)Net income before tax (157,114) (249,683)Income tax expense (14,229) (104,857)NET INCOME (LOSS) FOR ThE YEAR (171,343) (354,540) NET INCOME (LOSS) FOR ThE YEAR ATTRIBUTABLE TO:Owners of the parent company (171,343) (354,540)Minority interests - -NET INCOME (LOSS) FOR ThE YEAR (171,343) (354,540)

STATEMENT OF COMPREhENSIVE INCOME12-31-2016

ThCh$12-31-2015

ThCh$Net income (loss) for the year (171,343) (354,540)Foreign currency translation gains (losses), net of tax - -OThER COMPONENTS OF OThER COMPREhENSIVE INCOME, BEFORE TAX - -

Income tax related to components of other comprehensive income

- -

OThER COMPREhENSIVE INCOME - -TOTAL COMPREhENSIVE INCOME (LOSS) (171,343) (354,540) COMPREhENSIVE INCOME (LOSS) ATTRIBUTABLE TO:Owners of the parent company (171,343) (354,540)Minority interests -TOTAL COMPREhENSIVE INCOME (LOSS) (171,343) (354,540)

12-31-2016ThCh$

12-31-2015ThCh$

CURRENT LIABILITIESTrade and other payables 10,426 100TOTAL CURRENT LIABILITIES 10,426 100

NON-CURRENT LIABILITIESRelated party payables, non-current 610,651 322,015TOTAL NON-CURRENT LIABILITIES 610,651 322,015

NET EQUITYShare capital 963,810 963,810Retained earnings (1,103,162) (931,819)EQUITY ATTRIBUTABLE TO OWNERS OF ThE PARENT COMPANY (139,352) 31,991

Minority interests -TOTAL NET EQUITY (139,352) 31,991

TOTAL NET EQUITY AND LIABILITIES 481,725 354,106

ShAREhOLDERS EQUITY AND LIABILITIES

STATEMENT OF CASh FLOWS12-31-2016

ThCh$12-31-2015

ThCh$CASh FLOW FROM OPERATIONSReceipts from operating activitiesReceipts from the sale of goods and services - -Payments for operating activitiesPayments to suppliers for goods and services (373,175) (311,865)Income tax refunded (paid) - -Other cash receipts (payments) -NET CASh FLOWS (USED FOR) OPERATING ACTIVITIES (373,175) (311,865)

NET CASh FLOWS FROM (USED FOR) INVESTING ACTIVITIESLoans from related companies 316,158 430,759NET CASh FLOWS FROM FINANCING ACTIVITIES 316,158 430,759INCREASE (DECREASE) IN CASh & CASh EQUIVALENTS BEFORE EXChANGE VARIANCE EFFECTS (57,017) 118,894Exchange variance effects on cash and cash equivalents - -NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS (57,017) 118,894Cash and cash equivalents at the start of the year 126,349 7,455Cash and cash equivalents at the end of the year 69,332 126,349

270

07 CH

AP.


STATEMENT OF ChANGES IN EQUITY For the years ended December 31, 2016 and 2015

ShARE CAPITALThCh$

EXChANGE VARIANCES

ON CONVERSION

RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

Opening balances as of January 1, 2016 963,810 - - - (931,819) 31,991ChANGES IN EQUITYNet loss for the year - (171,343) (171,343)Capital increaseSpin-offOther comprehensive incomeIncrease (decrease) due to transfers and other changesTOTAL ChANGES IN EQUITY - - - - (171,343) (171,343)CLOSING BALANCE AS OF DECEMBER 31, 2016 963,810 - - - (1,103,162) (139,352)

ShARE CAPITALThCh$

EXChANGE VARIANCES

ON CONVERSION

RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

Opening balances as of January 1, 2015 10,000 - - - (597,986) (587,986)ChANGES IN EQUITYNet loss for the year - (171,343) (171,343)Capital increaseSpin-offOther comprehensive incomeIncrease (decrease) due to transfers and other changesTOTAL ChANGES IN EQUITY - - - - (171,343) (171,343)CLOSING BALANCE AS OF DECEMBER 31, 2015 963,810 - - - (931,819) 31,991

INMOBILIARIA LOTE 18

271

CONSTRUCTORA E INMOBILIARIA PRESIDENTE RIESCO S.A.



Shareholders

Constructora e Inmobiliaria Presidente Riesco S.A.

As external auditors of Consorcio Financiero S.A., we have audited its consolidated financial statements as of December 31, 2016 and 2015, and our related audit report is dated March 29, 2017. Summary financial statements have been prepared in accordance with General Regulation 30, Section II.2.1, paragraph A.4.2, issued by the Chilean Securities and Insurance Supervisor, for the subsidiary Constructora e Inmobiliaria Presidente Riesco S.A. and their accompanying notes regarding “accounting policies” and “transactions with related parties” are consistent in all material aspects with the information contained in the consolidated financial statements that we have audited.

Management of Consorcio Financiero S.A. and Constructora e Inmobiliaria Presidente Riesco S.A. are responsible for the preparation of these summary financial statements that include their accounting policies and transactions with related parties.

The summary financial statements for Constructora e Inmobiliaria Presidente Riesco S.A. that include its accounting policies and transactions with related parties were included in the consolidation process of Consorcio Financiero S.A. as of December 31, 2016 and 2015.




272

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AP.


ESTADO DE RESULTADOS POR FUNCION12-31-2016

ThCh$12-31-2015

ThCh$Revenue from ordinary activities - -Cost of sales - -GROSS MARGIN - -Administrative expenses (31,499) (1,871)Indexation adjustments (124,446) (122,603)Net income (loss) before tax (155,945) (124,474)Income tax expense 50,964 169,619NET INCOME (LOSS) FOR ThE YEAR (104,981) 45,145 NET INCOME (LOSS) FOR ThE YEAR ATTRIBUTABLE TO:Owners of the parent company (104,981) 45,145Minority interests - -NET INCOME (LOSS) FOR ThE YEAR (104,981) 45,145

STATEMENT OF COMPREhENSIVE INCOME12-31-2016

ThCh$12-31-2015

ThCh$Net income (loss) for the year (104,981) 45,145Foreign currency translation gains (losses), net of tax - -OThER COMPONENTS OF OThER COMPREhENSIVE INCOME, BEFORE TAX (104,981)

Income taxes relating to components of other comprehensive income (loss)

- -

OThER COMPREhENSIVE INCOME (LOSS) - -TOTAL COMPREhENSIVE INCOME (LOSS) (104,981) 45,145 COMPREhENSIVE INCOME (LOSS) ATTRIBUTABLE TO:Owners of the parent company (104,981) 45,145Minority interests - -TOTAL COMPREhENSIVE INCOME (LOSS) (104,981) 45,145


CLASSIFIED STATEMENT OF FINANCIAL POSITION

12-31-2016ThCh$

12-31-2015ThCh$

ASSETSCURRENT ASSETSCash and cash equivalents 63,070 -TOTAL CURRENT ASSETS 63,070 -

NON-CURRENT ASSETSInventories 4,520,514 4,293,513Deferred tax assets 220,582 169,619Total non-current assets 4,741,096 4,463,132

TOTAL ASSETS 4,804,166 4,463,132

As of December 31, 2016 and 2015 ShAREhOLDERS EQUITY AND LIABILITIES

12-31-2016ThCh$

12-31-2015ThCh$

CURRENT LIABILITIESTrade and other payables - 1,872Tax liabilities - -TOTAL CURRENT LIABILITIES - 1,872

NON-CURRENT LIABILITIESRelated party payables, non-current 4,853,628 4,405,741TOTAL NON-CURRENT LIABILITIES 4,853,628 4,405,741

NET EQUITYShare capital 34,572 34,572Retained earnings (84,034) 20,947EQUITY ATTRIBUTABLE TO OWNERS OF ThE PARENT COMPANY (49,462) 55,519

Minority interests - -TOTAL NET EQUITY (49,462) 55,519

TOTAL EQUITY AND LIABILITIES 4,804,166 4,463,132

For the years ended December 31, 2016 and 2015 STATEMENT OF COMPREhENSIVE INCOME

STATEMENT OF CASh FLOWS12-31-2016

ThCh$12-31-2015

ThCh$CASh FLOW FROM OPERATIONSReceipts from operating activitiesReceipts from the sale of goods and services -Acquisition of inventory (120,500) -Payments to suppliers for goods and services -Income tax refunded (paid) -Other cash receipts (payments)NET CASh FLOWS (USED FOR) OPERATING ACTIVITIES (120,500)

NET CASh FLOWS FROM (USED FOR) INVESTING ACTIVITIESLoans from related companies 183,570 -NET CASh FLOWS FROM FINANCING ACTIVITIESINCREASE (DECREASE) IN CASh & CASh EQUIVALENTS BEFORE EXChANGE VARIANCE EFFECTSExchange variance effects on cash and cash equivalents -NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS 63,070 -Cash and cash equivalents at the start of the year - -Cash and cash equivalents at the end of the year 63,070 -

STATEMENT OF CASh FLOWS - DIRECT METhOD For the years ended December 31, 2016 and 2015

CONSTRUCTORA E INMOBILIARIA PRESIDENTE RIESCO S.A.

273

ShARE CAPITALThCh$

EXChANGE VARIANCES

ON CONVERSION

RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

Opening balances as of January 1, 2016 34,572 - - - 20,947 55,519ChANGES IN EQUITYNet loss for the year - (104,981) (104,981)Other comprehensive incomeIncrease (decrease) due to transfers and other changes - -TOTAL ChANGES IN EQUITY - - - - (104,981) (104,981)CLOSING BALANCES AS OF DECEMBER 31, 2016 34,572 - - - (84,034) (49,462)

ShARE CAPITALThCh$

EXChANGE VARIANCES

ON CONVERSION

RESERVESThCh$

OThER MISCELLANEOUS

RESERVESThCh$

OThER RESERVES

ThCh$

RETAINED EARNINGS

ThCh$



COMPANYThCh$

Opening balances as of June 26, 2015 34,572 - - - (24,198) 10,374ChANGES IN EQUITYNet income for the year - 45,145 45,145Other comprehensive incomeIncrease (decrease) due to transfers and other changes - -TOTAL ChANGES IN EQUITY - - - - 45,145 45,145CLOSING BALANCE AS OF DECEMBER 31, 2015 34,572 - - - 20,947 55,519

STATEMENT OF ChANGES IN EQUITY For the years ended December 31, 2016 and 2015

274

07 CH

AP.


STATEMENT OF RESPONSIBILITY We, the undersigned in our role as Directors and CEO of CONSORCIO FINANCIERO S.A. respectively, do hereby declare under oath that all the information contained in this Annual Report is a faithful expression of the truth, for which we assume the corresponding legal liability.

Marcos BÜCHI BUC´7.383.017-6Chairman

JUAN HURTADO VICUÑA5.715.251-6

Director

EDUARDO FERNÁNDEZ LEÓN3.931.817-2

Director

PEDRO HURTADO VICUÑA6.375.828-0

Director

JOSÉ ANTONIO GARCÉS SILVA3.984.154-1

Director

HERNÁN BÜCHI BUC´5.718.666-6

Director

JUAN JOSÉ MAC-AULIFFE GRANELLO5.543.624-K

Director

PATRICIO PARODI GIL8.661.203-8

Chief Executive Officer

SERGIO RESTREPO ISAZA0-E (Foreign)

Director

RAMIRO MENDOZA ZÚÑIGA7.578.740-5

Director