PA - Banco Security

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2.50 Matching of assets and insurance reserve liability Vida Security
The Company has valued its technical reserves in accordance with SVS Circular N° 1512 regarding matching standards.
According to such circular, as long as the future cash flows from the debt securities portfolio and technical reserves generated by
annuities, are matched in time, the future cash flows of the eligible technical reserves eligible are discounted at a rate close to the
average yield of the long term public financial instruments.
The differences between the application of this standard and general standards for the valuation of liabilities give rise to adjustments
at year-end presented in equity in the shareholders’ equity account “Matching Reserve”.
As of September 2005 the Companies applies the modifications made to Circular Letter No. 1512 through Circular Letter No. 1731,
the General Standard No. 178 and the Circular Letter No. 302 of the SVS, incorporating the mortality tables (RV-2004) with its
improvement factors to all policies valid as of the calculation date and discounting the flows without considering the security factor.
Subsequently, as of June 2008, the Company started to apply the new modifications of the General Standard No. 207 of the SVS,
which created the mortality tables MI-2006 and B-2006, whose gradual application in the calculation of the financial technical
reserve of the policies effective prior to February 1, 2008 was regulated by Circular Letters No. 1.857 and No. 1.874.
The tables MI-2006 and B-2006 shall be used in the calculation of the programmed withdrawals, the additional contribution and the
technical reserves by the insurers of the second group, that maintain obligations to contract annuity insurance per Law Decree No.
3.500 of 1980.
2.51 Mismatch reserve Vida Security
The Company establishes a mismatch reserve in accordance with General Standard No. 132 and its modifications and Circular Letter
No. 1.595 of the SVS, for the risk it assumes from the mismatch in the term, interest rate, currency and instrument types, between
the fund value reserves and the investments supporting this reserve for insurance policies with investment account in favor of the
insured person.
Not 3 - First Time Adoption of International Financial Reporting Standards
(IFRS).
The accompanying financial statements are the first in which Grupo Security adopts IFRS. The established standards of IFRS
adoption are included in IFRS 1 “First Time Adoption of International Financial Reporting Standards”, issued by the IAS and
in Circular Letter No. 456 dated June 20, 2008, in which the SVS establishes certain matters and criteria in relation to the
adoption process of IFRS. Note that the consolidated subsidiaries Banco Security and Vida Security continue applying prior
accounting principles. Previously, the financial statements of Grupo Security were prepared in conformity with Chilean GAAP and
the standards issued by the SVS. These financial statements are presented in thousands of Chilean pesos (ThCLP$) as this is the
functional currency of the main economic environment in which Grupo Security operates.
As of year-end 2010, the financial information is presented under IFRS comparative with year-end 2009, including an explanatory
note to the financial statements, an explicit and unreserved statement of compliance with the IFRS standards, except for the
consolidated subsidiaries Banco Security and Vida Security who continue applying prior accounting principles.
The transition date was January 1, 2009 and January 1, 2010 is the date when Grupo Security’s first IFRS reporting period started.