Amending Circular 1/18 of the Single Circular on Insurance and Sureties

DOF: 23/02/2018

At the margin, a seal with the National Coat of Arms, which reads: United Mexican States.- Ministry of Finance and Public Credit.- National Insurance and Sureties Commission.

AMENDING CIRCULAR 1/18 OF THE SINGLE CIRCULAR ON INSURANCE AND SURETIES

(Provision 22.1.2 and Annex 22.1.2.)

The National Insurance and Sureties Commission, based on the provisions of Articles 366, fraction II, 372, fractions VI and XLII, 373, and 381 of the Law of Insurance and Surety Institutions, and

CONSIDERING

That on April 4, 2013, the "Decree issuing the Law of Insurance and Surety Institutions and reforming and adding various provisions of the Law on the Insurance Contract" was published in the Official Gazette of the Federation, in whose First Article the Law of Insurance and Surety Institutions is issued.

That on December 19, 2014, the Single Circular on Insurance and Sureties was published in the Official Gazette of the Federation with the provisions derived from the Law of Insurance and Surety Institutions, systematizing its integration and homogenizing the terminology used, in order to thereby provide legal certainty regarding the regulatory framework to which Insurance Institutions and Mutual Insurance Societies, Surety Institutions, and other persons and entities subject to the inspection and surveillance of the National Insurance and Sureties Commission must adhere in the development of their operations.

That fraction III, subsection g), of Article 25, in relation to fraction XII of Article 27, both of the Law of Insurance and Surety Institutions, provide, within the damage operations that Insurance Institutions may conduct, the surety insurance branch, which consists of the payment of an indemnity to the insured as compensation or penalty for patrimonial damages suffered, within the limits provided in the insurance contract, upon the occurrence of the circumstances agreed upon regarding the failure by the insurance policyholder to comply with their legal or contractual obligations, excluding obligations related to contracts of a financial nature.

That in accordance with the provisions of Article 300 of the Law of Insurance and Surety Institutions, the accounts that insurance and surety institutions, as well as mutual insurance societies, must keep in their accounting, will adhere to the general provisions issued for this purpose by the National Insurance and Sureties Commission.

That through Annex 22.1.2 of the Single Circular on Insurance and Sureties, the National Insurance and Sureties Commission makes known the accounting criteria applicable from the 2016 fiscal year, so that Insurance Institutions and Mutual Insurance Societies adequately present their assets, liabilities, capital, results, and off-balance sheet accounts.

That in order for Insurance Institutions and Mutual Insurance Societies to adequately apply said accounting criteria, it is necessary to include in them those applicable to surety insurance provided for in Articles 25, fraction III, subsection g), and 27, fraction XII, both of the Law of Insurance and Surety Institutions, therefore, with this act, Annex 22.1.2 of the current Single Circular on Insurance and Sureties, titled "Accounting Criteria Applicable to Institutions, Mutual Societies, and Controlling Companies," is modified.

That in order to comply with Article Five of the "Agreement establishing the guidelines that must be observed by the dependencies and decentralized organisms of the Federal Public Administration, regarding the issuance of general administrative acts to which Article 69-H of the Federal Administrative Procedure Law applies," published in the Official Gazette of the Federation on March 8, 2017, this Commission will simplify the CNSF-18-001-A procedure, "Reports incidents of unauthorized access to User Sensitive Information in electronic media. Modality A: Report of Incidents regarding unauthorized access to User Sensitive Information" and the obligation to send what is indicated in fraction I of Provision 4.10.18 of Chapter 4.10 "On the use of electronic media for the contracting of insurance and surety operations," and Annex 4.10.18 "Format for reporting information relative to cases where user sensitive information is extracted, lost, or institutions and mutual societies assume or suspect any incident involving unauthorized access to said information in electronic operations" of the Single Circular on Insurance and Sureties; as well as the CNSF-18-001-B procedure "Reports incidents of unauthorized access to User Sensitive Information in electronic media. Modality B: Report of results of the investigation carried out regarding incidents related to unauthorized access to User Sensitive Information in electronic media, to determine if the information has been or may be misused" and the obligation to send what is indicated in fraction II of Provision 4.10.18 of Chapter 4.10 "On the use of electronic media for the contracting of insurance and surety operations," of the Single Circular on Insurance and Sureties, within a period of six months counted from the publication of this Amending Circular in the Official Gazette of the Federation.

For the aforementioned reasons, the National Insurance and Sureties Commission has resolved to issue the following modification to the Single Circular on Insurance and Sureties in the following terms:

AMENDING CIRCULAR 1/18 OF THE SINGLE CIRCULAR ON INSURANCE AND SURETIES

(Provision 22.1.2 and Annex 22.1.2.)

FIRST.- Provision 22.1.2 of the Single Circular on Insurance and Sureties is modified to read as follows:

22.1.2.

...

II.

...

Surety Insurance (B-25).

III.

...

SECOND.- Annex 22.1.2 of the Single Circular on Insurance and Sureties is modified.

TRANSITORY PROVISIONS

FIRST.- This Amending Circular will enter into force the day following its publication in the Official Gazette of the Federation.

SECOND.- This Commission, in order to comply with Article Five of the "Agreement establishing the guidelines that must be observed by the dependencies and decentralized organisms of the Federal Public Administration, regarding the issuance of general administrative acts to which Article 69-H of the Federal Administrative Procedure Law applies," published in the Official Gazette of the Federation on March 8, 2017, will simplify the CNSF-18-001-A procedure "Reports incidents of unauthorized access to User Sensitive Information in electronic media. Modality A: Report of Incidents regarding unauthorized access to User Sensitive Information" and the obligation to send what is indicated in fraction I of Provision 4.10.18 of Chapter 4.10 "On the use of electronic media for the contracting of insurance and surety operations," and Annex 4.10.18 "Format for reporting information relative to cases where user sensitive information is extracted, lost, or institutions and mutual societies assume or suspect any incident involving unauthorized access to said information in electronic operations" of the Single Circular on Insurance and Sureties; as well as the CNSF-18-001-B procedure "Reports incidents of unauthorized access to User Sensitive Information in electronic media. Modality B: Report of results of the investigation carried out regarding incidents related to unauthorized access to User Sensitive Information in electronic media, to determine if the information has been or may be misused" and the obligation to send what is indicated in fraction II of Provision 4.10.18 of Chapter 4.10 "On the use of electronic media for the contracting of insurance and surety operations," of the Single Circular on Insurance and Sureties, within a period of six months counted from the publication of this Amending Circular in the Official Gazette of the Federation.

The foregoing is made known to you, based on Articles 366, fraction II, 372, fractions VI and XLII, 373, and 381 of the Law of Insurance and Surety Institutions.

Respectfully,

Effective Suffrage. No Re-election.

Mexico City, February 14, 2018.- The President of the National Insurance and Sureties Commission, Norma Alicia Rosas Rodríguez.- Signature.

ANNEX 22.1.2.

ACCOUNTING CRITERIA APPLICABLE TO INSTITUTIONS, MUTUAL SOCIETIES AND CONTROLLING COMPANIES

CONTENTS

Glossary of Terms.

Series I.

Criteria relative to the general scheme of accounting.

Basic scheme of the set of accounting criteria (A-1).

Application of particular standards (A-2).

Application of general standards (A-3).

Series II.

Criteria relative to the specific concepts of insurance and surety operations.

Liquidity (B-1).

Investments in securities (B-2).

Securities lending (B-3).

Repos (B-4).

Loans (B-5).

Real Estate (B-6).

Debtors (B-7).

Accounts receivable (B-8).

Reinsurers and reinsurers (B-9).

Permanent investments (B-10).

Technical reserves (B-11).

Off-balance sheet accounts (B-12).

Premiums (B-13).

Costs (B-14).

Adjudicated Assets (B-15).

Financial derivative instruments and hedging operations (B-16).

Effects of inflation (B-17).

Claims (B-18).

Salvage (B-19).

Procedure for the proration of income and expenses (B-20).

Analogous and related operations (B-21).

On the accounting recording of premiums for short-term endowment insurance plans and flexible insurance plans (B-22).

Leases (B-23).

Coinsurance Operations (B-24).

Surety Insurance (B-25).

Series III

Criteria relative to the basic consolidated financial statements.

Minimum catalog (C-1)

Balance sheet (C-2);

Income statement (C-3);

Cash flow statement (C-4);

Statement of changes in equity and capital (C-5);

Financial Statements of Controlling Companies of Financial Groups (C-6).

Glossary of terms

(1) Creditors for Cancelled Policies, will refer to the liability deriving from premiums to be refunded to insured parties at their request due to the partial or total cancellation of policies, as well as to sureties for the return or cancellation of issued sureties, when so agreed.

(2) Significant Business Activity, that operation or branch that was authorized to operate in accordance with Title 2 of these Provisions.

(3) Adjudicated Assets, movable assets (equipment, titles or securities, rights, among others) and immovable assets that as a consequence of overdue debts, or a debt, right, or uncollectible item, the Institution:

Acquires through judicial adjudication, or

Receives through deed in lieu of payment.

(4) Overdue Portfolio, in view of Provision 8.14.69, Fraction I, is that which is composed of credits whose borrowers are declared in commercial bankruptcy, or whose principal, interest, or both, have not been liquidated in the terms originally agreed, considering for this purpose what is established in the section titled "Transfer to Overdue Portfolio" of this criterion.

(5) Current Portfolio, integrated by credits that are current in their payments of both principal and interest, as well as those with overdue principal or interest payments that have not met the conditions provided in this criterion to be considered as overdue, and those that having been restructured or renewed, have evidence of sustained payment as established in this criterion.

(6) Write-off, is the cancellation of the credit when there is evidence that formal collection efforts have been exhausted or the practical impossibility of recovering the Credit has been determined.

(7) Coinsurance, in accordance with fraction V of Article 2 of the Law of Insurance and Surety Institutions, Coinsurance will be understood as the participation of two or more Insurance Institutions in the same risk, by virtue of direct contracts made by each of them with the same insured.

(8) Leading Coinsurer, will be that insurance institution that is in charge of processing the delivery of the insurance policy(ies) to the insured, managing the total collection, paying the agent their commission, attending to claims, and if applicable, making the corresponding payment and marketing salvage, on behalf of itself and the other coinsurer, who in turn will have the obligation to cover the expenditures agreed upon for the concept of Coinsurance administration in the respective contract.

(9) Non-Leading Coinsurer, will be that insurance institution that will have the obligation to cover the expenditures made by the Leading Coinsurer for the administration of the business and respond for its participation in the obligations it has assumed, in exchange for the premiums it receives for said business.

(10) Contingencies in Litigation in Public Works Contracts, those claims received from sureties whose guaranteed obligation emanates from contracts governed, at the federal level, by the Law of Public Works and Related Services or by the Law of Acquisitions, Leases and Services of the Public Sector; or, in the case of sureties granted in relation to contracts of that type governed by local laws, of which some means of defense filed by the surety against the administrative rescission decreed in accordance with those laws for the surety's non-compliance is pending resolution, unless the suspension obtained by said surety against the execution of the rescission is taking effect; or unless the surety policy has expressly agreed that its enforceability will be subject to a final decision on the principal obligation being issued in the means of defense promoted by the surety, and additionally, the law allows this agreement.

(11) Amortized Cost, the acquisition cost of a financial asset or liability at initial recognition minus principal amortizations based on the Outstanding Balance, plus or minus the accumulated amortization using the Effective Interest Method of any difference between said initial amount and the amount at its maturity, and minus any impairment or uncollectibility reduction, directly or through the use of an estimate.

(12) Transaction Costs, those incremental costs that are directly related to the acquisition of a title, that is, that would not have been incurred had the title not been acquired. Transaction Costs do not include the discount or premium received or paid for Debt Securities, financing costs, or internal administrative costs.

(13) Credit, asset resulting from financing granted by entities based on what is established in the applicable legal provisions.

(14) Restricted Credits, those Credits are considered as such with respect to which there are circumstances by which they cannot be disposed of or used, and must be presented as restricted; for example, the Credit portfolio that the originating entity grants as guarantee or collateral in securitization operations.

(15) Debtors for Analogous and Related Services, represent an asset for Institutions and Mutual Societies for services provided by operations of: fund administration, medical services administration, payment services provider administration, as well as health services provision and the management of discount or membership cards, for analogous and related operations, which must be reflected in results as income from the administration of related services, which correspond to loss administration, administration and collection of sureties, for legal assistance, automotive services, and for trust administration; and income from related services, which correspond to the management of discount cards, services provided to third parties with own resources, research services, among others.

(16) Coinsurance Account Statement, document by which the Leading Coinsurer reports monthly to the other coinsurer the operations carried out on behalf of the latter in the percentage agreed in the Coinsurance contract celebrated between both parties, on premiums, commissions, claims, adjustment expenses, salvage, income and expenses for administration by concept of Coinsurance, information which must have the corresponding support.

(17) Estimate for Write-offs of Premiums Receivable, refers to the amounts of write-offs made to balances originating from insurance and surety premiums whose validity has ended and have not been collected, and are presented in the Balance Sheet as a deduction of debtors for premiums or premiums receivable for issued sureties.

(18) Estimate for Write-offs of Collected Premiums Not Reported, is represented by write-offs of insurance or surety premiums collected by authorized agents or intermediaries that have not been remitted by them to the Institutions, an estimate that can only be decreased against the collection of premiums, or in the case of not having been collected within one year following its registration, the constituted estimate can be cancelled against the corresponding asset.

(19) Preventive Estimate for Credit Risks, an affectation made against the results of the fiscal year that measures that portion of the Credit that is estimated to have no viability of collection.

(20) Cash Flows, are inflows and outflows of cash and cash equivalents. Movements between the items that constitute cash and cash equivalents will not be considered Cash Flows, given that these components are part of the administration of cash and cash equivalents of the entity, rather than its operating, investing, or financing activities.

(21) Urban Real Estate from Regular Products, those real estate that generate a product derived from their lease to third parties and those that, even if they are used for the own use of the Institutions and Mutual Societies, consider an imputed rent calculated based on a fair rental appraisal that a Credit Institution or public broker performs for this purpose, which must be updated annually.

(22) Effective Interest Method, that by which the Amortized Cost of a financial asset and the recognition of financial income over the relevant period are calculated. This, by applying the effective interest rate, that is, the discount rate that exactly equates the estimated future cash flows to be received over the expected life of the financial asset, or when appropriate, in a shorter period (for example, when there is the possibility of an early payment or redemption), with the net book value of said financial asset.

(23) Premiums in Deposit, will be represented by all those cash inflows for the payment of insurance and surety premiums that are received in advance or are pending application, as well as all those deposits registered in the banks accounts of the Institutions whose origin has not been identified, considering that the main source of income of the Institutions corresponds to the collection of premiums.

(24) Restructuring, is that operation that derives from any of the following situations:

Expansion of guarantees covering the Credit in question, or

Modifications to the original conditions of the Credit or to the payment scheme, among which are:

Change of the interest rate established for the remaining term of the Credit;

ii.

Change of currency or unit of account;

iii.

Granting of a grace period regarding the fulfillment of payment obligations in accordance with the original terms of the Credit, unless such concession is granted at the maturity of the Credit, in which case it will be a renewal.

(25) Renewal, is that operation in which the term of the Credit is extended during or at its maturity, or it is liquidated at any time with the proceeds from another Credit contracted with the same entity, in which the same debtor or another person who by their patrimonial links constitute common risks is a party. In these terms, a Credit is not considered renewed when the disbursements are made during the validity of a pre-established Credit line.

(26) Outstanding Balance, Is the part of a debt that has not been covered or has not yet been amortized or the result obtained by the application of the Amortized Cost.

(27) Debt Securities, those financial instruments that in addition to constituting an account receivable on the one hand and an account payable on the other, have a determined term and generate for the holder of the titles, Cash Flows throughout the term of the same.

(28) Book Value, the balance of an investment in a title, including affectations by the valuation result, interest, accrued dividends not collected, impairment loss, or any other affectation that corresponds to it, as the case may be.

(29) Market Value or Price, is the amount that can be obtained from the sale or the amount that must be paid for the acquisition of a financial instrument in an organized or recognized securities market. For the purposes of this criterion, the Market Value or Price of a title quoted in the Mexican market will be that provided by price providers. In the case of securities quoted on international exchanges, the Market Value or Price will be that made known by said organizations (price providers) through official publications.

(30) Fair Value,

the amount by which a financial asset can be exchanged or a financial liability settled, between interested parties, willing and informed in a free competition transaction.

(31) Adjudication Value, that which is fixed for the purposes of the adjudication of assets as a consequence of lawsuits related to claims of rights in favor of Institutions. In the case of deeds in lieu of payment, it will be the price agreed upon between the parties. In the case of goods promised for sale or with reservation of ownership, it will be decreased by the collections received on account of the good.

(32) Nominal Value,

is the amount of cash and cash equivalents paid or collected in a

operation.

(33) Probable Life of the Property, the remaining useful time indicated by the corresponding appraisal, from its date of preparation.

Series I. Criteria relating to the general accounting scheme.

Basic scheme of the set of accounting criteria (A-1)

(1) The accounting of Institutions and Mutual Societies shall adhere to the basic structure that, for the application of Financial Reporting Standards (NIF), was defined by the Mexican Council of Financial Reporting Standards, A.C. (CINIF) in Series NIF A "Conceptual Framework".

(2) Institutions and Mutual Societies shall observe the accounting guidelines of the NIF, except when, in the judgment of the Commission, it is necessary to apply specific regulations or accounting criteria, taking into consideration that Institutions and Mutual Societies carry out specialized operations.

(3) In accordance with what is established in Title 25 "Of Controlling Societies of Financial Groups subject to Inspection and Surveillance by the Commission" of these Provisions, the accounting criteria indicated in this Annex for Institutions and Mutual Societies shall be applicable, insofar as relevant, to Controlling Societies.

(4) Regarding this, the regulations referred to in the previous paragraph shall cover recognition, valuation, and presentation standards, applicable to specific items within the financial statements of Institutions and Mutual Societies, as well as those applicable to their preparation.

(5) Additionally, in cases where Institutions and Mutual Societies consider that there is no accounting criterion applicable to any of the operations they carry out, issued by CINIF or by the Commission, the bases for supplementary application provided in NIF A-8 shall be applied, considering:

That in no case shall its application contravene the general concepts established in the accounting criteria for Institutions and Mutual Societies indicated in this Annex;

ii.

That the standards applied in the supplementary process shall be replaced when a specific accounting criterion is issued by the Commission, or an NIF, on the subject to which said process was applied.

(6) Institutions and Mutual Societies that follow the supplementary process must communicate in writing to the Vice Presidency of Institutional Operation of the Commission, responsible for their supervision, within 10 natural days following the application, the accounting standard that has been adopted supplementarily, as well as its basis of application and the source used.

Additionally, they must carry out the corresponding disclosure in accordance with what is indicated in Chapter 23.1 "Of the opinions and reports of independent external auditors" of these Provisions.

Application of particular standards (A-2)

(1) The objective of this section is to specify the application of the NIF as well as to indicate the clarifications that prove necessary on each one.

(2) Likewise, Institutions and Mutual Societies shall observe, until there is an express pronouncement by the Commission, the particular standards contained in bulletins or NIF issued by CINIF and on topics not foreseen in the accounting criteria, provided that:

They are in force with definitive character;

ii.

They are not applied in advance;

iii.

They do not contravene the general concepts established in the accounting criteria, and

iv.

There is no express pronouncement by the Commission, among others, regarding clarifications to the particular standards contained in the NIF that is issued, or regarding their non-applicability.

Clarifications to the particular standards contained in the NIF

(3) Taking into consideration that Institutions and Mutual Societies carry out specialized operations, it is necessary to establish clarifications that adapt the particular standards of recognition, valuation, presentation, and in their case, disclosure, established by CINIF. In virtue of this, Institutions and Mutual Societies, when observing what is established in the NIF mentioned at the beginning of this criterion, shall adjust to the following:

NIF B-1 "Accounting Changes and Corrections of Errors".- When, as a result of the supervision activities carried out by the Commission and in accordance with the functions performed by external auditors and the commissioner, as well as the activities carried out by councilors, general managers, directors and managers, internal auditors, and other officials in charge of directing and controlling the operations of Institutions and Mutual Societies, errors in the accounting registration of their operations, accounting changes, or any other situation that, due to its importance, originates the modification of the financial statements are detected, Institutions and Mutual Societies must carry out their correction and substitution, and include in the disclosure notes the causes that gave rise to said modification. Likewise, they must present again to the Commission the quarterly or annual information that they have incorrectly reported in accordance with what is indicated in Title 22 of these Provisions.

In the case that Institutions and Mutual Societies prove that they fall under any of the situations indicated in paragraph 23 of NIF B-1 and provide the evidence that supports their arguments to consider it impracticable to carry out the correction of errors for all previous affected periods, or the effects for a specific period, they shall have the obligation to reveal said situation in accordance with what is indicated in Chapter 23.1 "Of the opinions and reports of independent external auditors" of these Provisions.

NIF B-15 "Conversion of Foreign Currencies".- Regarding the valuation of operations in foreign currency and in compliance with article 296 of the LISF, the valuation of assets, liabilities, and off-balance sheet accounts in foreign currency shall be carried out using the following bases:

What is established in NIF B-15 "Conversion of Foreign Currencies" shall be applied.

ii.

In the application of the aforementioned NIF B-15, the exchange rate to be used to establish the equivalence of the national currency with the United States dollar shall be the FIX exchange rate published by the Bank of Mexico in the Official Gazette of the Federation on the date of the transaction or preparation of the financial statements, as applicable, which is published on the next business day of those dates.

iii.

A position shall be established for each currency handled;

iv.

To the determined position, the equivalence of the currencies of various countries with the United States dollar, corresponding to the month in question, issued by the Bank of Mexico and published in the first days of each month in the Official Gazette of the Federation, shall be applied;

Once the original currencies are converted to United States dollars, these shall be valued at the FIX exchange rate indicated in fraction ii.

vi.

The difference resulting from the valuation of the currencies of the asset and liability accounts shall be recorded in the results of the exercise, considering for such effects the sub-item Changes, belonging to the item of Exchange Rate Result indicated in the minimum catalog referenced by Criterion C-1 of this Annex.

NIF C-8 "Intangible Assets".- Institutions and Mutual Societies must have prior authorization from the Commission to register intangible assets, in order to verify that they comply with what is indicated in NIF C-8. In the case of operations that generate a Commercial Credit, such authorization shall not be necessary.

Bulletin C-9 "Liabilities, provisions, contingent assets and liabilities and commitments".- Institutions and Mutual Societies must observe the criteria indicated in Bulletin C-9 "Liabilities, provisions, contingent assets and liabilities and commitments", except when it concerns the following aspects:

Technical Reserves; for which they must adhere to what is provided in Title 5 of these Provisions, as well as what is established in Title 22 and this Annex.

ii.

Reinsurance operations, for which they must adhere to what is provided in Title 9 "Of Reinsurance, Reaffirmation and other risk and liability transfer mechanisms" of these Provisions.

iii.

Claims, for which they must adhere to what is indicated in criterion r) "Claims" of this annex.

iv.

Subordinated obligations not convertible into shares and other credit instruments .- The subordinated obligations not convertible into shares and other credit instruments issued by the entity shall be registered as a liability; likewise, it shall register the amount to be paid for the obligations and other credit instruments issued according to the Nominal Value of the instruments.

It shall register the amount of accrued interest to be paid derived from the debt instruments issued by the institution in the sub-item of Creditors for Interest of Subordinated Obligations of Mandatory Conversion to Capital, belonging to the item of Various Creditors, indicated in the minimum catalog referenced by Criterion C-1 of this Annex, corresponding to the issuance of debt instruments.

In the case of issuance and placement expenses of obligations not susceptible to be converted into shares and of other credit instruments, they must be deducted from the amount of the liability and must be considered to determine the effective interest rate. In the case of redemption of the obligations and other credit instruments before their maturity, it will be necessary to adjust the interest rate, in order to bring to the results the proportional part that corresponds to the obligations redeemed in advance.

Likewise, when obligations are redeemed in advance by decision of the issuing institution, it is generally necessary to pay a premium to the holders of the obligations.

The amount of the premium must be registered as an expense of the exercise in which the obligations are redeemed.

Bulletin C-11 "Equity".- For the case of real estate that Institutions and Mutual Societies register, they must include the surplus from the revaluation of real estate in accordance with what is indicated in criterion B-6 "Real Estate" of this annex.

Bulletin C-15 "Impairment of the value of long-term assets and their disposal".- For the case of real estate that Institutions and Mutual Societies register, Bulletin C-15 shall not be applicable, since they must adhere to what is indicated in article 296 of the LISF in relation to the valuation and accounting registration indicated in criterion B-6 "Real Estate" of this annex and to chapter 8.5 and provision 8.2.3 fraction XXIII of this Circular.

For the case of Institutions and Mutual Societies, Significant Business Activity shall be understood as that operation or line of business that was authorized to operate in accordance with Articles 25 and 36 of the LISF, for the application of this NIF.

Application of general standards (A-3)

(1) The objective of this section is to specify the establishment of standards of general application that Institutions and Mutual Societies must observe in the recognition, valuation, presentation, and disclosure applicable to the accounting criteria regarding the following concepts:

Restricted assets.- All those assets regarding which there are circumstances by which they cannot be disposed of or used shall be registered as restricted assets, remaining in the same item from which they originate. Likewise, it shall be considered that those assets coming from operations that are not settled on the same day, that is, received with a value date different from the negotiation date, form part of this category.

Liquidating accounts.- The amount of overdue operations to be received or to be paid resulting from the operations carried out by the entities in matters of investments in securities, repurchase agreements, securities lending, and derivatives, once they reach their maturity and while the corresponding settlement is not perceived, shall be registered in liquidating accounts, as agreed in the respective contract.

Likewise, for operations in which immediate settlement or same-day value date is not agreed, including foreign currency sales and purchases, on the negotiation date, the amount to be received or to be paid shall be registered in liquidating accounts, until their settlement is carried out. In cases where the amount to be received is not realized within 10 natural days following the date on which it was registered in liquidating accounts, it shall be reclassified as Overdue Portfolio and the estimation for uncollectibility or difficult collection shall be constituted simultaneously for the total amount thereof.

Accrued but unrealized interest.- Accrued interest for the different asset or liability items shall be presented in the Balance Sheet together with their corresponding principal.

Recognition of assets and/or liabilities.- The recognition in the financial statements of assets and/or liabilities, including those coming from foreign currency sales and purchases, investments in securities, repurchase agreements, securities lending, derivatives, and issued titles, shall be carried out on the date the operation is negotiated, regardless of the settlement or delivery date of the good.

Cancellation of assets and/or liabilities.- The cancellation in the financial statements of assets and/or liabilities, including those coming from foreign currency sales and purchases, investments in securities, repurchase agreements, securities lending, derivatives, and issued titles, shall be carried out on the date the operation is negotiated, regardless of the settlement or delivery date of the good.

Valuation of UDI.- The value to be used shall be that made known by the Bank of Mexico in the Official Gazette of the Federation (DOF), applicable on the date of valuation.

Valuation of VSM (times minimum wage).- The value to be used shall be that of the minimum wage corresponding, approved by the National Commission of Minimum Wages and made known in the DOF, applicable on the date of valuation.

Series II. Criteria relating to the specific concepts of insurance and surety operations.

Availability (B-1)

Objective

(1) In this section, the particular criteria for the application of standards relative to the registration, valuation, and presentation in the financial statements of the items that make up the availability item in the Balance Sheet of Institutions and Mutual Societies are defined.

(2) For the purposes of the previous paragraph, the availability item shall refer to cash and cash equivalents indicated in NIF C-1.

(3) Deposits in financial entities represented or invested in titles shall be subject to what is indicated in criterion B-2 "Investments in Securities" of this annex;

Valuation standards

(4) In the case of coined precious metals, these shall be valued considering their applicable quotation on the date of valuation.

(5) In the case of foreign currencies, they must adhere to what is indicated in "Clarifications to the particular standards contained in the NIF", number 2, of this Annex.

(6) Currencies acquired that are agreed to be settled on a date subsequent to the negotiation of the sales and purchase operation shall be recognized on said negotiation date as a restricted availability (currencies to be received), while sold currencies shall be registered as an outflow of availability (currencies to be delivered). The counterparty shall be a liquidating account to be received or to be paid (creditor or debtor), as applicable.

Presentation standards

(7) Checks, both domestic and foreign, that have not been effectively collected after two business days of having been deposited, and those that, having been deposited, have been subject to return, must be charged against the item that gave rise to them; in the case of not being able to identify, their registration shall be recognized in the item of various debtors. Once forty-five days have passed following the registration in various debtors and if said checks have not been recovered or collected, they must be written off directly against results.

(8) The amount of checks issued prior to the date of the financial statements that are pending delivery to beneficiaries must be reincorporated into the cash item, recognizing the corresponding liability.

(9) When there are no offsetting agreements with the corresponding financial institution, overdrafts must be shown in the item of various creditors, even if other checking accounts with a debit balance are maintained in the same institution.

Investments in securities (B-2)

Objective

(1) The objective of this section is to define the particular criteria for the application of standards relative to the registration, valuation, and presentation in the financial statements, for the holding and returns that Institutions and Mutual Societies obtain, as a consequence of their investments in financial instruments, adhering primarily to what is established in this criterion, as well as to what is provided in Bulletin C-2 "Financial Instruments" of the Financial Reporting Standards issued by CINIF, provided that this is not contrary to what is established in the LISF and in the administrative provisions emanating from it.

(2) The following aspects are the subject of this criterion:

Initial recognition and valuation of investments in securities;

Subsequent recognition of gains or losses derived from investments in securities obtained by holding or disposing of investments;

Establish guidelines for transfers between categories of financial assets, and

Recognition of impairment of investments in securities, and

(3) The following topics are not the subject of this criterion:

Permanent investments contemplated by NIF B-8 "Consolidated or Combined Financial Statements" and NIF C-7 "Investments in associates, joint ventures, and other permanent investments", referenced by criterion B-11 of this annex.

Investments in derivative instruments.

Classification

(4) In accordance with Provision 3.9.2. Fraction II, and for the purposes of bulletin C-2, at the time of acquisition, financial instruments shall be classified for their valuation and registration within one of the following categories:

Trading securities,

Hold-to-maturity securities, or

Available-for-sale securities.

(5) The classification between the categories referred to in this fraction shall be made by the administration of Institutions and Mutual Societies, taking as a basis their investment policy, the intention regarding the securities, as well as the financial capacity or ability to maintain the investment. The category of Hold-to-maturity securities shall be for the exclusive use of Insurance Institutions that operate Pension Insurance, considering the nature of their obligations and what is indicated in paragraphs 20, 56, and 57 of this Criterion.

(6) Each of these categories has specific standards regarding recognition, valuation, and presentation standards in the financial statements.

Trading Debt Securities

(7) Trading Debt Securities are those that the administration of Institutions, Mutual Societies, and Controlling Societies holds in its own position with the intention of covering claims and/or operating expenses, and therefore, to negotiate them in the short term on dates prior to their maturity.

Recognition standards

(8) At the time of purchase, Trading Debt Securities shall be registered at their Acquisition Cost.

(9) Transaction Costs for the acquisition of the securities shall be recognized in the results of the exercise on the date of acquisition.

Valuation standards

(10) Trading Debt Securities shall be valued at their Fair Value, taking as a basis the market prices made known by price providers or specialized official publications in international markets. In case these do not exist, the last price registered within the 20 business days prior to the date of valuation shall be taken; said valuation must be carried out at the close of each month. If there is no quotation according to the previous timeframe, the Acquisition Cost shall be taken as the updated price for valuation.

(11) The accrual of the return of Debt Securities (interest, coupons, or equivalents) shall be determined in accordance with the Effective Interest Method. Such returns shall be recognized in the statement of results. At the moment that accrued interest is collected, the item of investments in securities shall be decreased against the item of availability.

(12) On the date of their disposal, the buy-sell result shall be recognized for the difference between the selling price and the Book Value thereof.

(13) The valuation result of the securities that are disposed of, which has been previously recognized in the results of the exercise, shall be reclassified as part of the buy-sell result on the date of the sale.

(14) The gain or loss in exchange coming from investments in securities denominated in foreign currency shall be recognized in the results of the exercise.

(15) In the case of operations that comprise two or more accounting periods of registration, the amount to be reflected as a valuation result shall be the difference resulting between the last Book Value and the value determined based on Market Prices (or equivalents) at the time of valuation. Valuation results that are recognized before the investment is redeemed or sold shall have the character of unrealized and, consequently, shall not be susceptible to capitalization or distribution of dividends among its shareholders, until they are realized in cash.

(16) The gain or loss in exchange coming from investments in securities denominated in foreign currency shall be recognized in the results of the exercise, considering for such effects the sub-item Changes, belonging to the item of Exchange Rate Result indicated in the minimum catalog referenced by Criterion C-1 of this Annex.

Hold-to-maturity Debt Securities

(17) Only those Insurance Institutions specialized in Pension Insurance may classify securities in the category of Hold-to-maturity Debt Securities that

have the intention and financial capacity to hold them to maturity, without prejudice to their liquidity and that there are no legal or other limitations that could impede the original intention.

(18) Insurance Institutions specialized in Pension Insurance shall not classify an instrument as held-to-maturity if they only intend to hold it for an indefinite period as a consequence of expectations related to changes in market interest rates or liquidity needs, or changes in sources of resources or risks in the exchange rates of foreign currencies.

Recognition Standards

(19) At the time of purchase, securities acquired to be held to maturity shall be recorded at their Acquisition Cost.

(20) Transaction Costs for the acquisition of securities shall be recognized as part of the investment.

Valuation Standards

(21) Securities held to maturity shall be valued at their Amortized Cost.

(22) The difference in the valuation of a period to another for the securities shall be recorded in the income statement of the period in which it occurs.

(23) Likewise, the accrual of the yield of Debt Securities (interest, coupons, or equivalents) shall be carried out in accordance with the Effective Interest Method. Such yields shall be recognized in the income statement. At the moment that accrued interest is collected, the securities investment item shall be decreased against the cash and cash equivalents item.

(24) The valuation result of securities that are sold, which has been previously recognized in the results of the exercise, shall be reclassified as part of the sales result on the date of the sale.

(25) In the case of operations that comprise two or more accounting recording periods, the amount to be reflected as the valuation result shall be the difference resulting between the last Book Value and the new determined value. Valuation results that are recognized before the investment is redeemed or sold shall have the character of unrealized and, consequently, shall not be subject to capitalization or distribution of dividends among its shareholders until they are realized in cash.

(26) The gain or loss in exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the exercise, considering for such purposes what is stated in the minimum catalog referred to in Criterion C-1 of this Annex.

Debt Securities Available for Sale

(27) Debt Securities available for sale are those financial assets in which, from the moment of investing in them, there is an intention different from an investment for trading purposes and for holding to maturity, in which gains can be obtained based on their changes in market value and not only through the yields inherent to them.

Recognition Standards

(28) At the time of purchase, securities available for sale shall be recorded at their Acquisition Cost.

(29) Transaction costs for the acquisition of securities shall be recognized as part of the investment.

Valuation Standards

(30) Debt Securities available for sale shall be valued at their Fair Value, taking as a basis the market prices made known by price providers or by specialized official publications in international markets. In case these do not exist, the last price registered within the 20 business days prior to the valuation shall be taken; said valuation shall be carried out at the close of each month. If there is no quotation according to the previous period, the Acquisition Cost shall be taken as the updated price for valuation.

(31) The valuation result, as well as its corresponding effect by monetary position, shall be recognized in equity, until such financial instruments are sold or transferred to another category.

(32) The accrual of the yield of Debt Securities (interest, coupons, or equivalents) shall be determined in accordance with the Effective Interest Method. Such yields shall be recognized in the income statement.

(33) At the time of their disposal, the effects previously recognized in equity shall be reclassified in the results of the period. Likewise, the accumulated valuation result, which has been recognized in equity, shall be reclassified as part of the sales result on the date of sale.

(34) The gain or loss in exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the exercise, considering for such purposes what is stated in the minimum catalog referred to in Criterion C-1 of this Annex.

(35) The original investment of non-quoted Debt Securities shall be valued at their Fair Value, which shall be obtained using Technical Determinations of Fair Value. The interest, premiums, and/or discounts generated by these instruments must be recognized in the results in the period as they accrue.

Equity Securities for Trading Purposes

(36) Equity Securities for trading purposes are those that the administration of the Institution, Mutual Society, or Holding Company has in its own position, with the intention of covering claims and/or operating expenses, so from the moment of investing in them, there is an intention to trade them in the short term.

Recognition Standards

(37) At the time of purchase, Equity Securities acquired for trading purposes shall be recorded at their Acquisition Cost.

(38) Transaction Costs for the acquisition of securities shall be recognized in the results of the exercise on the date of acquisition.

Valuation Standards

(39) Investments in quoted equity securities shall be valued at their Fair Value, taking as a basis the market prices made known by price providers or by specialized official publications in international markets. Only in case that these do not exist, the last price registered shall be taken, taking as the updated price for valuation the Book Value of the issuer or the Acquisition Cost, whichever is lower, giving accounting effect to the valuation at the close of each month in question.

(40) The adjustments resulting from the valuations referred to in the previous paragraph shall increase or decrease monthly, as appropriate, and shall be carried to results. In the case of operations that comprise two or more accounting periods, the amount to be reflected as gain or loss by valuation shall be the difference resulting between the last book record and the Value or Market Price at the time of valuation.

(41) Valuation results that are recognized before the investment is sold shall have the character of unrealized and, consequently, shall not be subject to capitalization or distribution of dividends among its shareholders until they are realized in cash.

(42) The gain or loss in exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the exercise, considering for such purposes what is stated in the minimum catalog referred to in Criterion C-1 of this Annex.

(43) The valuation result of securities that are sold, which has been previously recognized in the results of the exercise, shall be reclassified as part of the sales result on the date of the sale; those securities that were acquired in previous years whose valuation was already recognized in those years, on the date of sale only the difference shall be reclassified as part of the sales result.

Equity Securities Available for Sale

(44) Equity Securities available for sale are those that the administration of the Institution, Mutual Society, or Holding Company, from the moment of investing in them, intends to trade them in the medium term and on dates prior to their maturity, with the object of obtaining gains based on their changes in market value and not only through the yields inherent to them.

Recognition Standards

(45) At the time of purchase, Equity Securities acquired to be kept available for sale shall be recorded at their Acquisition Cost.

(46) Transaction Costs for the acquisition of securities shall be recognized as part of the investment.

Valuation Standards

(47) Investments in quoted shares shall be valued at their Fair Value, taking as a basis the Market Prices made known by price providers or by specialized official publications in international markets. In case these do not exist, the last price registered within the 20 business days prior to the valuation shall be taken. If there is no quotation according to the previous period, the Book Value of the issuer shall be taken as the updated price for valuation, giving accounting effect to the valuation at the close of each month in question.

(48) The valuation result shall be recognized in equity, until such financial instruments are sold, while the exchange effect in the case of instruments denominated in foreign currency shall be carried to results.

(49) Valuation results that are recognized before the investment is sold shall have the character of unrealized and, consequently, shall not be subject to capitalization or distribution of dividends among its shareholders until they are realized in cash.

Dividends

(50) Dividends of equity securities for trading purposes and available for sale shall be recognized in the corresponding category, against the results of the exercise, at the moment that the right to receive payment thereof is generated. When dividends are collected, the investment shall be decreased against the cash and cash equivalents item.

Transfers of Categories

(51) Institutions and Mutual Societies, for the purpose of category transfers, shall adhere to what is established by Bulletin C-2 "Financial Instruments", issued by CINIF.

Financial Instruments Held to Maturity

(52) Insurance Institutions specialized in Pension Insurance and Mutual Societies, for the purpose of transfers between categories, shall adhere to what is established by Bulletin C-2 "Financial Instruments", issued by CINIF.

Financial Instruments Classified as Available for Sale

(53) Insurance Institutions specialized in Pension Insurance and Mutual Societies, for the purpose of transfers between categories, shall adhere to what is established by Bulletin C-2 "Financial Instruments", issued by CINIF.

Financial Instruments for Trading Purposes

(54) The transfer of instruments originally classified for trading purposes to any of the other categories of financial instruments is not permitted. Nor is the transfer of financial instruments from other categories to the category of instruments for trading purposes permitted.

(55) Notwithstanding the foregoing, in the case where a financial instrument is in a market that, due to unusual circumstances beyond the control of the entity, loses the characteristic of liquidity, said instrument may be transferred to the category of financial instruments available for sale or to the category of held-to-maturity, as appropriate, provided that such movement is consistent with the Institution's investment policy. For the case of transfer to the held-to-maturity category, the Insurance Institution specialized in Pension Insurance may carry out such classification if it has a defined maturity date and if the entity has both the intention and the capacity to hold it to maturity.

(56) When transfers occur between the categories of financial instruments, the following shall be observed:

1) Those Debt Securities, transferred from the held-to-maturity category to available-for-sale securities, shall be valued from that moment at Fair Value and the result of said valuation shall be carried to the equity sub-item named "surplus or deficit by valuation of Debt Securities available for sale", indicated in the minimum catalog referred to in Criterion C-1 of this Annex, and

2) Financial instruments classified as available for sale, transferred to the held-to-maturity category, the unrealized gains or losses, while they remained in their original category of available for sale and recognized as an item within equity, shall remain in this same item, but shall be amortized during the remaining life of the instrument, charged to the results of the period and in a manner similar to the amortization of premiums or discounts.

Early Sales of Instruments

(57) Insurance Institutions specialized in Pension Insurance may carry out the early sale of instruments classified in the held-to-maturity category, when, with the purpose of preserving the levels of matching of their investments, it is necessary to acquire instruments of greater duration. In any other case, prior authorization from the Commission will be required.

(58) In all cases of early sales, approval from the investment committee of the Insurance Institution specialized in Pension Insurance in question must be obtained, as well as demonstrating that the coverage of the Investment Base and the level of sufficiency of the Admissible Own Funds to cover the RCS do not present shortfalls derived from such operations.

(59) Likewise, they must present to the Commission within ten calendar days following the close of the month in which the operation was carried out, the documentation detailed below:

1) Letter stating the reasons for such early sales;

2) Copy of the accounting vouchers of the movements made, and

3) Minutes or agreement of the investment committee where the approval of the early sales carried out is recorded.

Liquidating Accounts

(60) Regarding operations carried out by Institutions and Mutual Societies in matters of investments in securities, repurchase agreements, securities lending, and derivatives, once these reach their maturity and while the corresponding settlement is not perceived, as agreed in the respective contract, the amount of the operations due to be collected or paid shall be registered in liquidating accounts (debtors or creditors for settlement of operations).

(61) Securities acquired that are agreed to be settled on a date subsequent to the agreement of the purchase-sale operation and that have been assigned, that is, identified, shall be recognized as restricted values (to be received) at the time of the agreement, while the sold titles shall be recognized as an exit of securities investments (to be delivered). The counterpart shall be a liquidating account, to be collected or to be paid (creditor or debtor), as appropriate, in accordance with what is established in criterion A-3 "Application of general standards", of this Annex.

Impairment of Securities

(62) Institutions and Mutual Societies, for the identification and recognition of impairment adjustments, shall adhere to what is established by Bulletin C-2 "Financial Instruments", issued by CINIF.

c)
Securities Lending (B-3)

Objective

(1) This section aims to define the particular standards relative to the recognition, valuation, presentation, and disclosure in the financial statements, of securities lending operations carried out by Institutions and Mutual Societies acting on their own behalf.

Recognition and Valuation Standards

(2) On the date of contracting the securities lending operation, acting as the lender, with respect to the value of the loan object transferred to the borrower, the Institution or Mutual Society shall recognize it as restricted in accordance with what is established in criterion A-3 "Application of general standards", for which it shall follow the valuation, presentation, and disclosure standards that correspond, that is, with the original valuation of the title.

(3) The accrued premium amount shall be recognized in the results of the exercise, through the Effective Interest Method, affecting the interest debtor corresponding during the validity of the operation.

(4) Regarding financial assets received as collateral, these shall be recognized in off-balance sheet accounts, following for their valuation the criteria of series B-2 of this annex.

(5) In the case where the borrower fails to comply with the conditions established in the contract, Institutions and Mutual Societies shall recognize the entry of the collateral, according to the type of asset in question, as well as write off the value of the operation object that had previously been restricted.

Presentation Standards

(6) The off-balance sheet accounts recognized for financial assets received as collateral shall be cancelled when the securities lending operation reaches its maturity or there is default by the borrower.

d)
Repurchase Agreements (B-4)

Objective

(1) This section aims to define the particular standards relative to the recognition, valuation, presentation, and disclosure in the financial statements, of repurchase agreement operations.

Recognition and Valuation Standards

(2) On the date of contracting the repurchase agreement operation, acting as the Repo Party (Reportadora), the Institution or Mutual Society shall recognize the exit of cash or a creditor liquidating account, recording the repo debtor initially measured at the agreed price, which represents the right to recover the cash delivered.

(3) During the life of the Repo Agreement, the repo debtor referred to in the previous paragraph shall be valued at its Amortized Cost, through the recognition of the Premium in the results of the exercise as it accrues, in accordance with the Effective Interest Method, affecting the corresponding repo debtor during the validity of the operation.

Presentation Standards

(4) The financial assets that the Insurance Institution and Mutual Society has received as collateral shall be registered as an off-balance sheet account following for its valuation the provisions established in this chapter.

(5) In case the Repo Party fails to comply with the conditions established in the contract, and therefore cannot claim the collateral, the institution or society as the Repo Party shall recognize in its Balance Sheet the entry of the collateral, according to the type of asset in question, against the aforementioned repo debtor.

(6) Institutions and Mutual Societies shall not recognize collateral in their financial statements but only in off-balance sheet accounts, with the exception of what is established in the previous paragraph, that is, when the risks, benefits, and control of the collateral have been transferred due to the default of the Repo Party.

(7) The off-balance sheet accounts recognized for the collateral received shall be cancelled when the Repo Agreement operation reaches its maturity or there is default by the Repo Party.

e)
Loans (B-5)

Objective and Scope

(1) This section aims to define the particular standards relative to the recognition, valuation, and presentation in the financial statements of loan or Credit operations of Institutions and Mutual Societies in accordance with Chapter 8.14 of this Circular.

(2) It includes accounting guidelines relative to the Preventive Estimate for Credit Risks.

(3) The following are not subject to this criterion:

1) The establishment of the methodology for the qualification and constitution of the Preventive Estimate for Credit Risks, and

2) The accounting standards relative to securities issued in series or in mass, which are quoted in recognized markets and that the entity maintains in its own position, even if they are linked to Credit operations, being subject to the criterion "Investments in securities", according to what is provided in Title 22 of the General Provisions derived from the LISF.

Recognition and Valuation Standards

(4) The balance to be registered in loans or Credits shall be the amount effectively granted to the borrower and, if applicable, the insurance that has been financed. To this amount, any type of interest that accrues according to the Credit's payment scheme shall be added.

(5) The Outstanding Balance of Credits denominated in Minimum Wage Units (VSM) shall be adjusted based on the corresponding minimum wage, registering the adjustment for the increase against a Deferred Credit, which shall be recognized in the results of the exercise in the proportional part corresponding to a 12-month period as interest income. In case there is a modification to said minimum wage before the end of the 12-month period, the pending balance to be amortized shall be carried to the results of the exercise in the interest income item on that date.

(6) In cases where the collection of interest is made in advance, these shall be recognized as an advance collection in the Deferred Credits and advance collections item, which shall be amortized during the life of the Credit under the straight-line method against the results of the exercise, in the interest by Credits item.

Partial Payments in Kind

(7) Partial payments received in kind to cover the amortizations (principal and/or interest) accrued, or if applicable, due, shall be registered in accordance with what is established in accounting criterion B-15 "Adjudicated Assets", of this Annex.

Commissions Charged for the Initial Granting of the Credit

(8) Commissions charged for the initial granting of the Credit shall be registered as a Deferred Credit, which shall be amortized against the results of the exercise as interest income, under the straight-line method during the life of the Credit.

(9) This category shall not include commissions that are recognized subsequent to the initial granting of the Credit, those incurred as part of the maintenance of said Credits, nor those charged in connection with Credits that have not been placed. Likewise, any other type of commissions not included in the previous paragraph shall be recognized on the date they are generated against the results of the exercise in the commissions and fees charged item.

Associated Costs and Expenses

(10) The costs and expenses associated with the initial granting of the Loan shall be recognized as a deferred charge, which shall be amortized against the results of the fiscal year as an interest expense, during the same accounting period in which income from charged commissions is recognized.

(11) For the purposes of the preceding paragraph, costs or expenses associated with the initial granting of the Loan shall be understood to be only those that are incremental and directly related to activities carried out by the Institutions and Mutual Societies to grant the Loan, for example, the credit evaluation of the debtor, evaluation and recognition of guarantees, negotiations for the terms of the Loan, preparation and processing of Loan documentation, and closing or cancellation of the transaction.

(12) Any other cost or expense not included in the preceding paragraph, including those related to promotion, advertising, potential clients, administration of existing Loans (follow-up, control, recoveries, etc.) and other auxiliary activities related to the establishment and monitoring of Credit policies, shall be recognized directly in the results of the fiscal year as they are incurred in the corresponding item according to the nature of the cost or expense.

(13) Commissions charged or pending collection, as well as costs and expenses associated with the initial granting of the Loan, shall not form part of the Credit portfolio.

Transfer to Past-Due Portfolio

(14) The Outstanding Balance, according to the conditions established in the Loan contracts, shall be registered as Past-Due Portfolio when:

1)
It is known that the borrower has been declared in commercial bankruptcy, in accordance with the Commercial Bankruptcy Law, or

2)
Its amortizations have not been fully settled in the terms originally agreed, considering the following for this purpose:

i.
If the debts consist of Loans with a single payment of principal and interest at maturity and present 30 or more calendar days past due;

ii.
If the debts refer to Loans with a single payment of principal at maturity and with periodic interest payments and present 90 or more calendar days past due for the respective interest payment, or 30 or more calendar days past due for the principal;

iii.
If the debts consist of Loans with periodic partial payments of principal and interest, including Housing Loans, and present 90 or more calendar days past due.

(15) Past-Due Loans that are restructured shall remain within the Past-Due Portfolio, until there is evidence of sustained payment.

(16) Loans with a term greater than one year with a single payment of principal and interest at maturity that are restructured during the Loan term shall be considered as Past-Due Portfolio.

(17) Renewals in which the borrower has not settled in time the total of accrued interest according to the terms and conditions originally agreed, and 25% of the original amount of the Loan, shall be considered as past-due until there is evidence of sustained payment.

(18) When it comes to renewals where the extension of the term is carried out during the validity of the Loan, the 25% referred to in the preceding paragraph shall be calculated on the original amount of the Loan that should have been covered by that date.

Suspension of Interest Accrual

(19) The accrual of accrued interest on credit operations entered into with each debtor shall be suspended at the moment the Outstanding Balance of the Loan is considered past-due. Likewise, the amortization in the results of the fiscal year of accrued financial income, as well as the amount corresponding to the purchase option of Loans from capitalizable leasing operations, shall be suspended at the moment the Outstanding Balance of the Loan is considered past-due.

(20) For those Loans that contractually capitalize interest to the amount of the debt, the suspension of interest accrual established in the preceding paragraph shall apply.

(21) While the Loan remains in Past-Due Portfolio, the control of accrued interest or financial income shall be carried out in off-balance sheet accounts. In the event that such past-due interest or financial income is collected, it shall be recognized directly in the results of the fiscal year in the interest income item, canceling in the case of capitalizable leasing the corresponding deferred Loan.

Unpaid Accrued Interest

(22) With respect to unpaid accrued interest or financial income corresponding to Loans considered as Past-Due Portfolio, an estimate shall be created for an amount equivalent to the total of these, at the time of transferring the Loan as Past-Due Portfolio.

(23) In the case of past-due Loans where, in their Restructuring, the capitalization of previously registered unpaid accrued interest in off-balance sheet accounts is agreed, the entity shall create an estimate for 100% of said interest. The estimate may be canceled when there is evidence of sustained payment.

Preventive Estimate for Credit Risks

(24) The Preventive Estimate for Credit Risks shall be determined based on Chapter 8.14 of these Provisions. This estimate shall be calculated and registered monthly, affecting the preventive estimates for credit risks item of the asset against the sub-item of preventive write-offs for credit risks that forms part of the Comprehensive Financing Result item, according to the minimum catalog of this Annex.

Write-offs, Eliminations, and Recoveries of Credit Portfolio

(25) The Institution or Mutual Society shall periodically evaluate whether a past-due Loan should remain in the Balance Sheet, or be written off. Such Write-off shall be carried out by canceling the Outstanding Balance of the Loan against the Preventive Estimate for Credit Risks. When the Loan to be written off exceeds the balance of its associated estimate, before carrying out the Write-off, said estimate shall be increased up to the amount of the difference.

(26) In addition to what is established in the preceding paragraph, the Institution or Mutual Society may opt to eliminate from its assets those past-due Loans that are 100% provisioned and do not meet the conditions to be written off. For such purposes, the Institution or Mutual Society shall cancel the Outstanding Balance of the Loan against the Preventive Estimate for Credit Risks.

(27) Any recovery derived from previously written-off or eliminated Loans shall be recognized in the results of the fiscal year.

Quitas, Condonations, Bonuses, and Discounts on the Portfolio

(28) Quits, condonations, bonuses, and discounts, that is, the amount forgiven of the Loan payment in part or total, shall be registered charged to the Preventive Estimate for Credit Risks. In the event that the amount of these exceeds the balance of the estimate associated with the Loan, estimates shall previously be constituted up to the amount of the difference.

Loans Denominated in Foreign Currency, in VSM, and in UDIS

(29) For the case of Loans denominated in foreign currency, in Minimum Wage Units (Veces de Salario Mínimo), and in UDIS, the estimate corresponding to said Loans shall be denominated in the currency or unit of account of origin that corresponds, converted to national currency.

Cancellation of Excesses in the Preventive Estimate for Credit Risks

(30) When the balance of the Preventive Estimate for Credit Risks has exceeded the amount required according to the methodologies established for each type of Loan, the differential shall be canceled on the date that the next rating of the type of Loan in question is carried out against the results of the fiscal year, affecting the same concept or item that originated it, that is, the Preventive Estimate for Credit Risks. In cases where the amount to be canceled is greater than the registered balance of said estimate in the results of the fiscal year, the excess shall be recognized as other operating income (expenses).

Presentation Standards

(31) Balance Sheet

1)
Loans or Credits shall be grouped as current and past-due, according to the type of Credit, that is, Credits, without restriction, and Restricted Credits, whether Credits with mortgage guarantee for urban real estate or Credits with pledge guarantee of titles or securities, and in turn, classified according to the nature of the operation;

2)
The Preventive Estimate for Credit Risks shall be presented in a separate item, subtracted from the Credit portfolio item;

3)
The financial asset representing the financing granted to the assignor referred to in the portfolio subject to securitization shall be presented as part of the portfolio of secured Credits;

4)
The effect of revaluation of Credits in Minimum Wage Units referred to in this criterion shall be presented as part of the Credit portfolio;

5)
The deferred charge for costs and expenses associated with the initial granting of the Loan shall be presented in a sub-item of other assets;

6)
The financial income to be accrued and commissions charged for the initial granting of the Loan shall be presented in a sub-item of deferred Credits;

7)
The amount of Credits from capitalizable leasing operations, both current and past-due, shall be presented net of deferred Credits;

8)
Interest collected in advance shall be presented together with the portfolio that gave rise to it;

9)
The liability for deposit guarantees shall be presented in a sub-item of other accounts payable;

10)
In sub-item of other accounts payable, if relative importance warrants it, the credit balances of Credits shall be presented, for example when there is a balance in favor of the borrower for having made a payment greater than the amount due, and

11)
In off-balance sheet accounts, in the item of unpaid accrued interest derived from past-due Credit portfolio, the amount of unpaid accrued interest derived from Loans that remain in Past-Due Portfolio shall be presented, as well as the financial income accrued derived from Credits in capitalizable leasing operations.

Income Statement

(32) Interest income shall be grouped as accrued interest, amortization of interest collected in advance, accrual of deferred Credit for revaluation of Credits in Minimum Wage Units, financial income accrued in capitalizable leasing operations, amortization of commissions charged for the initial granting of the Loan, exchange gain, and the result from revaluation of UDIS (credit balance). Likewise, interest expenses shall be grouped as amortization of costs and expenses associated with the initial granting of the Loan, as well as exchange loss and the result from revaluation of UDIS (debit balance).

(33) The Preventive Estimate for Credit Risks and exchange gain or loss, as well as the result from revaluation of UDIS and Minimum Wage Units, which originate from the estimate denominated in foreign currency, UDIS, or in Minimum Wage Units, converted to national currency, respectively, shall be presented as a specific item, immediately after the financial margin.

(34) Recoveries of previously written-off or eliminated operations shall be presented in the item of other operating income (expenses).

(35) Amortization of the deferred Credit generated by the purchase option at a reduced price, the purchase option when adopted at maturity, as well as income from participation in the sale of goods in capitalizable leasing to a third party, shall be presented in the item of other operating income (expenses).

(36) For the case of loans granted to officials and employees, the interest derived from them shall be presented in the income statement in the item of administrative and operational expenses (other expenses or income).

(37) Likewise, Loans to retirees shall be considered as part of the credit portfolio, and must adhere to the guidelines established in this criterion, except when, just like active employees, the collection of said loan is carried out directly, in which case they shall be registered according to the guidelines applicable to loans to officials and employees mentioned above.

The estimate for uncollectability or difficult collection corresponding to items directly related to the credit portfolio such as legal expenses, shall be determined by applying the same risk percentage assigned to the associated credit, as established in this criterion.

f)
Real Estate (B-6)

Objective and Scope

(1) This section aims to define the particular criteria regarding the recognition, valuation, presentation, and disclosure in the financial statements of real estate investment operations carried out by Institutions and Mutual Societies.

Recognition and Valuation Standards

(2) The real estate investments carried out by Institutions and Mutual Societies must comply with the following:

1)
The value of the real estate investments carried out by Institutions and Mutual Societies shall be estimated by the average of the physical and capitalization values of rents, according to appraisals conducted by experts from Credit institutions or public brokers in accordance with applicable provisions;

2)
Appraisals of the real estate properties of Institutions and Mutual Societies must be carried out annually. The aforementioned term shall be computed from the date of the last appraisal carried out. In the case of an inflationary environment, Institutions and Mutual Societies must adhere to what is stated in Criterion B-17 of these Provisions.

At any time, when in the judgment of the Commission there is any element that casts doubt on the value of a real estate property, it may order the Institution or Mutual Society to obtain a new appraisal with a Credit institution with which it does not maintain Patrimonial Links or Business Links.

Social interest housing and Urban Real Estate of Regular Products that Institutions and Mutual Societies acquire, build, or administer must be located in the territory of the Republic and insured for their destructible value with the corresponding coverages.

Institutions that, based on the previous provisions, have capitalized part of the surplus from the revaluation of real estate, must insert at the bottom of their consolidated Balance Sheet a note, in the following terms:

"The paid-in capital includes the amount of $_________, national currency, originating from the partial capitalization of the surplus from the revaluation of real estate".

Likewise, they must register the capitalization in off-balance sheet accounts: "Surplus from Real Estate Revaluation Capitalized" and its contra-account "Capitalization of Surplus from Real Estate Revaluation".

They shall register the amount of the surplus whose capitalization is carried out based on the respective authorizations granted by the Commission, and

3)
Depreciation of real estate shall be made on the value of the constructions, taking as a base both their historical cost and their corresponding valuation, based on the Probable Life of the Real Estate indicated in the appraisals.

Presentation Standards

(3) In view of the fact that the items indicated in the current minimum catalog, corresponding to Real Estate, must be integrated with their acquisition cost and their increase from revaluation, and consequently register their depreciation based on their historical value increased by their update, they must adjust to the following criteria:

1)
The increase from the update of the Real Estate item of regular products shall be reflected within that same item;

2)
The increase from the update of the Real Estate item acquired in financial leasing shall be reflected within that same item, and

3)
The increase from the update of the items of depreciation of real estate of regular products, and real estate acquired in financial leasing shall be reflected within their corresponding item.

(4) Regarding the registration of real estate under construction reflected in the item "Real Estate under Construction," they shall continue to register them at their acquisition value and until the works are finished and the corresponding appraisal is carried out, the Commission may accept the value corresponding to the constructions or repairs, transferring the amount to the item "Real Estate," subjecting the latter to the update process according to the established guidelines.

g)
Debtors (B-7)

Premium Debtors

(1) The premium or the corresponding fraction thereof that has not been paid within 30 calendar days following the date of its maturity, or in its case, within the shorter term agreed in the terms of article 40 of the Law on the Insurance Contract, shall be canceled accounting-wise within a maximum term of 15 calendar days following the end of the corresponding term.

(2) Likewise, within a term of 15 calendar days, the cancellation of ceded reinsurance operations that the issuance of the corresponding policy has given rise to shall be carried out.

Debts Owed by Departments and Entities of the Federal Public Administration

(3) Insurance Institutions shall register in the item of Debts Owed by Departments and Entities of the Federal Public Administration, indicated in the minimum catalog referred to in Criterion C-1 of this Annex, the balances that report an age greater than 45 calendar days following the date of their maturity and that are backed by a national public bid in charge of the Departments and Entities of the Federal Public Administration or Federal Entities, which have celebrated, for the purposes of the bid, an agreement with the Federal Executive, and that, according to what is established in the Law on Acquisitions, Leases and Services of the Public Sector and the Federal Budget and Fiscal Responsibility Law, are supported by the Expenditure Budget of the Federation for the Fiscal Year that corresponds.

(4) Insurance Institutions must register separately the premium subsidy in attention to the Agreement that the Secretariat of Finance and Public Credit annually issues regarding the Operational Rules of the Programs for the Premium Subsidy of the Agricultural Insurance and Support for Agricultural Insurance Funds.

(5) In the case of liability insurance that by legal provision have the character of mandatory, they cannot cease in their effects, be rescinded, nor be terminated prior to the date of termination of their validity, in attention to what is stated in article 150Bis of the Law on the Insurance Contract.

(6) In surety insurance, the total or partial non-payment of the premium shall not produce the cessation or suspension of its effects. Nor shall it be a cause for rescission of the contract, in consideration of what is stated in article 154 of the Law on the Insurance Contract.

(7) In surety policies, the total or partial non-payment of the premium shall not produce the cessation or suspension of its effects and only the return of the policy to the Institution that granted it will allow its cancellation in attention to what is provided in the last paragraph of article 166 of the LISF. Likewise, the cancellation registration may be carried out for expiration in accordance with what is stated in article 174 of the LISF.

(8) For the above, mandatory liability insurance, surety insurance, and surety policies cannot be canceled for non-payment.

Rights and Surcharges on Policies

(9) Rights on policies derived from the expenses of issuance of the policy, its modifications or reforms, which form part of the item of premium debtors, shall be registered by operation and branch in the item of Rights or Products of Policies that forms part of the operating cost at the moment that premiums are registered, with the object of recognizing income for said concept in the same period, independently of the date on which they are carried out.

(10) In the case of surcharges on premiums, which also forms part of the item of premium debtors, they shall be registered against the liability account, surcharges on premiums to be accrued, and subsequently, their affectation to results shall be carried out according to the accrual determined monthly, in the item of surcharges on premiums that forms part of the comprehensive financing result.

Debtors for Surety Responsibilities

(11) Institutions that operate Sureties must register in their accounting all operations they carry out, regardless of their origin, among which stands out the registration of debtors for surety responsibilities, which according to the minimum catalog referred to in Criterion C-1 of this Annex, is considered as an asset.

Regarding this, considering that by the mere passage of time, the collection rights that Institutions operating Sureties maintain deteriorate in different proportions according to the recovery guarantee obtained at the time, this Chapter establishes the provisions to which Institutions operating Sureties shall be subject for the registration of collection rights for the payment of sureties;

For the amount paid of claims carried out by Institutions operating Sureties with their own resources, and with recovery guarantees that meet the requirements established for each of them in Title 11 of these Provisions, in relation to articles 167, 168, and 169 of the LISF, said amount shall be registered in their asset, according to the percentages established in the annexed table of this criterion, removing the charge to results previously made, this independently of their accounting in off-balance sheet accounts.

If this collection right is recognized in a fiscal year subsequent to that in which the payment was made, the registration shall be carried out in the credit results item that corresponds.

The collection right that is registered shall not be greater than the amount paid and shall not exceed the value of the recovery guarantee that is held at the time of making the payment of the respective claim;

Expenses incurred for the recovery of claimed and paid sureties shall be registered directly to results, as well as the income obtained on them at the time;

To carry out the registration of the right to collect payment for surety claims mentioned in item 2) of this criterion, the corresponding file will include proof of amounts paid, as well as recovery guarantees available as of that date, indicating their value;

5)
The registration of collection rights will remain recorded in assets for a period of four years, counted from the date of payment, taking into account the quality of the guarantee, timeliness, and percentages indicated in the table annexed to this criterion. To this effect, the collection right must be cancelled once the aforementioned term has concluded and carried to the uncollectible accounts item, as it is being cancelled.

Accounting in uncollectible accounts and the cancellation of the asset may be carried out in advance when the Surety Institution has elements that attest to its registration;

6)
In those sureties claimed and paid that have reinsurance, whether taken or ceded with Institutions operating Sureties, Insurance Institutions, or Foreign Institutions, the corresponding part will be registered in the specific items for these operations, in accordance with the minimum catalog referenced in Criterion C-1 of this Annex, applying the Provisions of this Chapter as appropriate. For this purpose, the Ceding Institution must inform, within a period not exceeding 20 business days, counted from the date of accounting, those institutions to which it ceded the reinsurance;

7)
At the close of the fiscal year, Institutions operating Sureties must inform their board of directors of the amounts recorded in results for the payment of sureties, as well as for the cancellation of collection rights.

Percentages for the recognition of collection rights (Debtors for surety liability)

TYPE OF GUARANTEE	PERMANENCE IN ASSETS
	1st year	2nd year	3rd year	4th year
Pledge consisting of cash or securities issued or guaranteed by the Federal Government or issued by the Bank of Mexico.	100	0	0	0
Risk coverage for compliance granted by development banking institutions directly or through a trust.	100	50	25	0
Pledge consisting of qualified securities issued by credit institutions or securities subject to investment pursuant to articles 131 and 156 of the LISF with a "Good" or "Adequate" rating.	80	40	20	0
Pledge consisting of qualified securities issued by credit institutions or securities subject to investment pursuant to articles 131 and 156 of the LISF with a rating lower than "Adequate".	50	25	10	0
Pledge consisting of money deposits in credit institutions.	100	0	0	0
Pledge consisting of loans and credits in credit institutions.	100	0	0	0
Guarantee or contingent letter of credit from Credit Institutions.	100	0	0	0
"Stand By" Letter of Credit or guarantee or contingent letter of credit from Qualified Foreign Credit Institutions with a "Good" or "Adequate" rating.	100	0	0	0
"Stand By" Letter of Credit or guarantee or contingent letter of credit from Foreign Credit Institutions with a rating lower than "Adequate".	25	0	0	0
Notified "Stand By" Letter of Credit or notified guarantee or contingent letter of credit from Foreign Credit Institutions with a "Superior" or "Excellent" rating.	70	0	0	0
Notified "Stand By" Letter of Credit or notified guarantee or contingent letter of credit from Foreign Credit Institutions with a "Good" or "Adequate" rating.	50	0	0	0
Counter-surety from Institutions, Foreign Institutions registered in the RGRE with a "Good" or "Adequate" rating, or persons meeting the requirements of article 188 of the LISF.	100	0	0	0
Account Management.	100	0	0	0
Guarantee trusts on securities meeting the provisions of articles 131 and 156 of the LISF.	75	35	15	0
Mortgage.	75	75	15	0
Affectation in Guarantee	75	75	15	0
Guarantee trusts on real estate.	75	35	15	0
Indemnity contract from a foreign company with a "Superior", "Excellent", or "Good" rating.	75	20	10	0
Indemnity contract from a foreign company with an "Adequate" rating.	25	0	0	0
Joint obligation in favor of the Institution, of a Mexican or foreign company with an "Adequate" rating.	75	20	10	0
Guarantee trusts on securities other than those provided for in articles 131 and 156 of the LISF.	50	25	10	0
Pledge consisting of securities other than those provided for in articles 131 and 156 of the LISF.	50	25	10	0
Guarantee trusts on movable property.	50	25	10	0
Pledge consisting of movable property.	50	25	10	0
Proven solvency.	40	20	10	0
Ratification of signatures	35	15	0	0
Signature of joint obligor, natural person with verified patrimonial relationship.	25	10	0	0
Pledge of book credits.	50	25	10	0

(12) In the cases of liability and surety insurance mentioned in paragraphs 5 and 6, as well as premiums receivable for issued sureties, when they present an age greater than 90 natural days from the start of validity, they must register the doubtful collection estimate referenced in criterion B-8 Accounts Receivable.

Agents current account

(13) In the concept of Agents, Current Account, operations on behalf of or in favor of natural or legal persons intervening in the contracting or advising of insurance or surety contracts are registered, in accordance with the provisions of articles 91 and 101 of the LISF, excluding pending premiums to be collected in the hands of Agents.

(14) Furthermore, at the end of each month, this item will only show net debtor balances, so the amount of net creditor balances must be transferred to the liability item.

(15) With the purpose of recognizing figures relative to each new period, the previous movement must be cancelled and, if applicable, the amount of net creditor balances newly determined will be registered.

Adjusters, current account

(16) The amount of operations on behalf of or in favor of natural or legal persons intervening in the adjustment of claims, in accordance with the provisions of article 109 of the LISF, must be registered in the corresponding debtor item.

(17) At the end of each month, it will only show net debtor balances pending application, so the amount of net creditor balances must be transferred to the liability item.

(18) With the purpose of recognizing figures relative to each new period, the previous movement must be cancelled and, if applicable, the amount of net creditor balances newly determined will be registered.

h)
Accounts Receivable (B-8)

(1) Institutions and Mutual Societies must observe the criteria indicated in NIF C-3 "Accounts Receivable", with the following clarifications:

1)
For those accounts receivable granted by Institutions and Mutual Societies to identified debtors whose maturity is agreed upon for a term greater than 90 natural days, they must create, if applicable, a doubtful collection estimate that reflects their degree of uncollectibility.

This estimate must be obtained by conducting a study that serves as a basis to determine the different future quantifiable events that could affect the amount of those accounts receivable, thereby showing the estimated recovery value of the enforceable rights;

2)
The estimate for accounts receivable not included in the previous paragraphs must be constituted by the total amount of the debt according to the following terms:

i.
At 60 natural days following their initial registration, when they correspond to unidentified debtors, and

ii.
At 90 natural days following their initial registration, when they correspond to identified debtors.

3)
No estimate will be constituted for write-offs for uncollectibility or difficult collection in the following cases:

i. balances in favor of taxes;

ii. creditable value added tax;

iii. liquidating accounts;

iv. guarantee deposits;

v. dividends receivable on shares, and

vi. debtors for interest on deposits received as guarantee for sureties.

4)
Concepts resulting from operations between the parent company and branches will be subject to the following:

Movements referred to operations between the parent company and branches must be matched at the close of annual financial statements, so they must not show any balance; likewise, all operations must be registered in the debtor account and at the end of each month it will only show net debtor balances, so the amount of net creditor balances must be transferred to the liability account. With the purpose of recognizing figures relative to each new period, the previous movement must be cancelled and, if applicable, the amount of net creditor balances newly determined will be registered;

5)
Registration of uncollectible accounts.- Insurance and surety institutions must register in off-balance sheet accounts the amount of Uncollectible Credits that have been written off by the institution, maintaining control by lines of business in cases where appropriate.

i)
Reinsurers and Re-sureties (B-9)

Objective and scope

(1) This section establishes the accounting criteria that Institutions and Mutual Societies must adhere to in reinsurance and re-suretyship operations they carry out, in accordance with contracts, addenda, or any other related documents, through which assets and liabilities must be recorded and results affected derived from such operations.

Applicable criteria in matters of reinsurance or re-suretyship.

Asset

Insurance and Surety Institutions

Insurance Institutions, current account (asset-liability)

(2) All items resulting from reinsurance operations carried out with institutions from the country and abroad must be registered in the Insurance and Surety Institutions item; at the end of each month, it will only show net debtor balances for the reinsurer, so the amount of net creditor balances for the reinsurer must be transferred to the corresponding liability item. With the purpose of recognizing figures relative to each new period, the previous movement of the liability transfer must be cancelled and, if applicable, the amount of net creditor balances newly determined in said item will be registered.

Commissions Receivable/Payable from Reinsurance and re-suretyship taken/ceded (asset-liability)

(3) Institutions and Mutual Societies that have ceded reinsurance or re-suretyship will register the amount of the commission receivable corresponding to the premium retained by concept of Reserve for Risks in Course or Sureties in Force, which they have carried out pursuant to articles 34 fraction V, 35 fraction V, and 54 of the General Law of Insurance and Mutual Societies in effect until April 3, 2015; such commission will be due upon the release of the corresponding reserve. In operations of reinsurance or re-suretyship taken, Accepting Institutions will register the amount of commissions payable relative to premiums retained by them by concept of Reserve for Risks in Course; such commission will be due upon the release of the corresponding reserve.

Surety Institutions, Current Account (asset-liability)

(4) At the end of each month, it will only show net creditor balances. With the purpose of recognizing figures relative to each new period, the previous movement must be cancelled and, if applicable, the amount of net creditor balances newly determined will be registered.

Retained Deposits:

Premiums retained by reinsurance and re-suretyship taken

(5) In this item, the amount of reserves for premiums retained by ceding institutions, as well as premiums retained by foreign institutions in re-suretyship taken operations, will be registered.

Claims retained by reinsurance taken

(6) In this item, the amount of the reserve for claims retained by ceding institutions, in accordance with the respective contracts, will be registered.

Participation of Foreign Institutions or Reinsurers for Risks in Course

(7) In this item, the monthly amount of the Participation of Institutions in the Reserve for Risks in Course, for ceded or retroceded reinsurance, as well as the participation in said reserve of foreign reinsurers registered in the General Register of Foreign Reinsurers to take reinsurance and re-suretyship of the country, determined in accordance with applicable provisions, will be registered.

(8) Insurance Institutions and Mutual Societies that carry out life operations, in addition to constituting the Reserve for Risks in Course for all obligations assumed in accordance with applicable regulations, when reporting the cession of risks to Insurance Institutions and/or foreign reinsurers registered in the General Register of Foreign Reinsurers to take reinsurance and re-suretyship of the country, must constitute in the recoverable amount of reinsurance for Risks in Course according to the cession percentages established by proportional reinsurance contracts, considering what is indicated in Provision 8.20.2 of this Circular.

Participation of Institutions or Foreign Reinsurers for Pending Claims

(9) Institutions that have ceded or retroceded reinsurance will register in this item in the corresponding sub-account the recoverable amount for the participation of reinsurers for estimated claims, pending adjustment and settlement.

(10) Likewise, in this concept, the recoverable amount of reinsurance for reinsurance operations corresponding to the Reserve for Obligations Pending to Fulfill for Occurred and Unreported Claims and Adjusting Expenses Assigned to Claims will be registered in the corresponding sub-account, as well as the expected amount of future obligations derived from reported claims, considering what is indicated in Provision 8.20.2.

Other Recoverable Reinsurance Amounts

(11) The criteria applicable to the different concepts included in this item are illustrative and not exhaustive of items of the same nature.

Participation of reinsurers for salvages pending sale by reinsurance taken and ceded (asset-liability)

(12) In this concept, the amount of salvages pending sale as of the balance sheet or valuation date (asset) will be registered. The Institution that has ceded direct insurance and retroceded the reinsurance taken will reflect the amount of salvages pending sale in favor of insurance and reinsurance institutions (liability).

Participation of reinsurers in cash-paid claims, from reinsurance taken

(13) In this item, the amount to be recovered by retroceded reinsurance of reinsurance taken for cash-paid claims will be registered.

Participation of re-sureties for paid claims

(14) In this item, the amount of paid claims corresponding to the participation of country and foreign re-surety institutions for ceded and retroceded re-suretyship will be registered in the corresponding sub-account; and its cancellation will proceed when the corresponding funds for the respective paid claim are provisioned.

Participation of re-surety institutions in constituted liabilities

(15) The amount corresponding to the liabilities of sureties ceded and retroceded in re-suretyship for which a liability was constituted and are in charge of the institutions with which the re-suretyship was ceded and retroceded, in accordance with provisions issued by the Commission, will be registered under this concept.

Participation of re-insurers for non-proportional reinsurance and re-suretyship coverage

(16) In this item, the amounts to be recovered for claims or requests, in accordance with what is stipulated in non-proportional reinsurance or re-suretyship contracts celebrated, will be registered.

Reinsurance and Re-suretyship Intermediaries (liability)

(17) Items derived from brokerage operations in favor of intermediaries authorized by the Commission, in accordance with the provisions of article 106 of the LISF, must be registered in this item.

Participation of Institutions or Foreign Reinsurers in the Reserve of Sureties in Force

(18) The Recoverable Amount of Reinsurance of the Reserve of Sureties in Force corresponding to Institutions for the cession and retrocession of premiums they carry out will be registered under this item, considering what is indicated in Provision 8.20.2 of this Circular.

Estimate for write-offs of reinsurance or re-suretyship operations

(19) The asset items that Institutions and Mutual Societies must consider for the determination and accounting registration of estimates for write-offs of reinsurance or re-suretyship operations will be those currently in force in the financial statements established by this Commission, relating to the following concepts:

1)
Insurance Institutions current account

2)
Surety Institutions, current account

3)
Premiums retained by reinsurance and re-suretyship taken

4)
Claims retained by reinsurance taken

5)
Participation of reinsurers for salvages pending sale by reinsurance taken

6)
Participation of re-surety institutions for paid claims

7)
Participation of re-surety institutions in constituted liabilities

8)
Participation of re-insurers for non-proportional reinsurance and re-suretyship coverage

9)
Reinsurance and re-suretyship intermediaries

10)
Others relative to collection rights generated on behalf of reinsurers or re-surety institutions.

(20) Institutions and Mutual Societies must carry out, at least once a year, a detailed analysis of all and each of the items that make up the items indicated above, for the purposes of the determination and accounting registration of estimates for write-offs of reinsurance or re-suretyship operations, they must consider, without being limiting, the following aspects:

1)
The supporting documentation that accredits the items that make up the balances relative to facultative business, as well as confirmations from reinsurers on the quarterly balances reported in statements for Automatic Reinsurance Contracts and re-suretyship contracts;

2)
The age of the items that make up the balance of the aforementioned reinsurance or re-suretyship accounts;

3)
The degree of progress of collection efforts carried out by Institutions and Mutual Societies;

4)
Litigation balances owed by reinsurers;

5)
The financial and/or legal situation of reinsurers that could put the recovery of balances at risk, such as, among others, commercial insolvency, bankruptcy, or liquidation status, and

6)
That foreign reinsurers are registered in the General Register of Foreign Reinsurers to take reinsurance and re-suretyship of the country.

(21) It is the responsibility of the general management of Institutions and Mutual Societies to order that estimates for write-offs of reinsurance or re-suretyship operations be carried out, and for the external auditor, to evaluate the reasonableness thereof.

(22) Therefore, the minimum criteria that Institutions, Mutual Societies, and external auditors will apply to determine the registration and review of estimates for write-offs of reinsurance or re-suretyship operations, in accordance with article 33 of the Commercial Code, Bulletin C-3.- "Accounts Receivable" part of the Financial Information Standards, and Chapter 22.2 of these Provisions regarding books, records, and auxiliary registers, will be the following:

1)
Items that make up the balances of the items indicated in paragraph (19) items 1) to 6) may not remain registered in assets where there is no corresponding supporting documentation, understood as such, reinsurance or re-suretyship contracts, statements, balance confirmations, payment or collection from reinsurers or re-surety institutions, and collection management;

2)
To quantify the amount of items that make up the balance of reinsurance or re-suretyship accounts, a study must be conducted that serves as a basis to determine the value of those that will be deducted or cancelled, identifying items with an age greater than one year, to evaluate in accordance with the supporting documentation collected, the creation or increase of the corresponding estimate or, if applicable, their permanence within assets;

3)
Analyze the status of litigation relative to debts that reinsurers have with Institutions and Mutual Societies, evaluating from a legal point of view, the feasibility and expected percentage of recovery in order to register the corresponding estimate;

4)
Increases or reductions made to the write-off accounts for reinsurance or re-suretyship operations must affect results in the exercise in which they are made;

5)
For balances owed by reinsurers not registered in the General Register of Foreign Reinsurers to take reinsurance and re-suretyship of the country and for reinsurers in commercial insolvency, bankruptcy, or liquidation status, an estimate for doubtful collections must be constituted for 100%, unless Institutions and Mutual Societies have documentation allowing them to accredit the constitution of a percentage different from that indicated, and

6)
The possible existence of significant subsequent events must be considered as support to establish the reasonableness of estimates, or that affect the information and criteria used in the determination of said estimates.

(23) As a result of the analysis and determination of estimates for write-offs of reinsurance or re-suretyship operations, Institutions will have the obligation to register the estimates made in the write-off accounts, which for this purpose are established in the minimum catalog referenced in provision 38.1.8 of these Provisions.

(24) The probative documentation derived from the analysis and determination of items of doubtful recovery must be available in the files of Institutions and Mutual Societies.

Likewise, in cases where the analysis performed has not determined the need to make an estimate for write-offs, Institutions and Mutual Societies must keep available the documentation that meets the requirements established in Chapter 22.3, which accredits the performance of said analysis.

(25) The Commission may order adjustments to such estimates for those items that do not meet the requirements set forth in these Provisions.

(26) Institutions and Mutual Societies must report the reasons why they registered or, in their case, cancelled the items that make up the balance of the accounts for estimates for write-offs of doubtful collections generated by reinsurance or suretyship operations, through notes to the financial statements at the close of the relevant fiscal year.

Preventive Estimation of Credit Risks of Foreign Reinsurers

(27) Institutions or Mutual Societies that carry out operations with foreign reinsurers must register a preventive estimate of credit risk that reduces the recoverable amount of reinsurance referred to in Chapter 8.20, in accordance with Annex 8.20.2 of this Circular, recognizing the same in the specific line items "Preventive Estimation of Credit Risks of Foreign Reinsurers" in assets and "Preventive Write-offs for Recoverable Reinsurance Amounts" in results, both line items indicated in the minimum catalog referred to in Criterion C-1 of this Annex.

Liabilities

Premiums Retained for Ceded Reinsurance and Suretyship

(28) Institutions or Mutual Societies that have ceded or retroceded reinsurance or suretyship will register the amount of premiums retained by Foreign Institutions or Reinsurers that have been effected in accordance with articles 34 fraction V, 35 fraction V and 54 of the General Law of Insurance and Mutual Societies in force until April 3, 2015.

Reserve for Claims Retained for Ceded Reinsurance

(29) Institutions or Mutual Societies that have ceded or retroceded reinsurance or suretyship will register the amount of claims reserves retained by Foreign Institutions or Reinsurers that have been effected in accordance with articles 34 fraction V, 35 fraction V and 54 of the General Law of Insurance and Mutual Societies in force until April 3, 2015.

Other Participations

Participation to Surety Companies for Guarantees Pending Recovery

(30) The portion of guarantees to be recovered corresponding to surety institutions, derived from claims on sureties for ceded and retroceded suretyship, will be included in this line item.

Participation to Surety Companies for Recoveries, Payable

(31) Recoveries pending payment to surety companies for ceded and retroceded suretyship, once the recovery on the written-off surety has been obtained, will be shown under this line item.

Creditors for Premiums of Non-Proportional Reinsurance and Suretyship Coverage

(32) This will reflect the amount of premiums pending payment derived from non-proportional reinsurance and suretyship contracts entered into, as well as provisions for such concepts.

Presentation Standards

(33) Concepts related to reinsurers and surety companies in the terms established in this Provision must be shown in the Consolidated Balance Sheet of the Institutions, grouped in the reinsurers and surety companies line item in assets and liabilities, as appropriate.

Financial Reinsurance

(34) This criterion establishes the accounting treatment to which Institutions must adhere in financial reinsurance operations they carry out, regarding presentation.

(35) The funds that Institutions obtain through financing from financial reinsurance contracts, which represent rights and obligations, must be registered in the following concepts:

1)
Assets

i.
Loans from Financial Reinsurance Contracts Granted.- refers to the amount of financing obtained pending collection, from financial reinsurance operations;

ii.
Debtors for Interest on Loans and Credits for Financial Reinsurance, which corresponds to accrued interest pending collection for financing obtained in financial reinsurance operations, and

iii.
Estimate for Write-off of Loans from Financial Reinsurance Contracts Granted, corresponds to the write-off effected due to non-compliance with the deadlines agreed upon in financial reinsurance contracts for the loan and interest, in accordance with what is stated in criterion B-8 Accounts Receivable.

2)
Liabilities

i.
Creditors for Financial Reinsurance Contracts, corresponds to the payment commitment on financing obtained through financial reinsurance operations, and

ii.
Creditors for Interest on Financial Reinsurance Contracts, refers to accrued interest payable derived from financial reinsurance contracts.

3)
Results

i.
Write-offs, corresponds to the charge to results for the write-off effected due to non-compliance with the deadlines agreed upon in financial reinsurance contracts for the loan and accrued interest pending collection, in accordance with what is stated in criterion B-8 Accounts Receivable;

ii.
Interest derived from Financial Reinsurance Contracts, corresponds to the interest owed by the institution established in financial reinsurance contracts, calculated according to the rate agreed upon in the financial reinsurance contracts, and

iii.
Interest on Financial Reinsurance Contracts Granted, corresponds to the accrued interest derived from financial reinsurance loans granted, calculated according to the rate agreed upon in the contracts.

Recognition and Valuation Standards

(36) All assets and liabilities derived from reinsurance operations must be recognized and valued in the balance sheet.

Participation of Reinsurers or Surety Companies

(37) In the case of the participation to which Institutions are entitled arising from the cession of responsibilities assumed in insurance and surety policies or from non-proportional reinsurance and suretyship contracts, this must be recognized for accounting purposes at the following moments:

For the purpose of ceded premiums:

a)
At the time of premium issuance and if there is a proportional reinsurance contract.

b)
When a risk already issued is ceded.

For the purpose of participation of institutions and reinsurers for claims:

a)
On the same date that the claim or claim giving rise to it is accounted for.

b)
On the valuation date of the Reserve for Incurred and Not Reported Claims and Assigned Adjustment Expenses for Incurred and Not Reported Claims.

Its valuation will be carried out in accordance with the participation corresponding to each reinsurer in the reinsurance contract and the currency in which it was concluded.

Retention of Resources to Reinsurers

(38) In reinsurance and suretyship operations taken, the retention of resources that cedents effect for the cession of responsibilities assumed in insurance and surety policies to Institutions, its accounting record must be recognized in the line item of Premiums Retained for Reinsurance and Suretyship Taken, in the month following the subscription of the insurance contracts, in accordance with the information provided by the cedent.

(39) Its valuation will be carried out in accordance with the participation corresponding to each reinsurer in the reinsurance contract and the currency in which it was concluded.

Current Account

(40) The items making up the line items of the current account of Institutions will be recognized under this concept when payment or collection for such concepts is accepted. In the case of the Reinsurance and Suretyship Intermediaries current account line item, only the brokerage that Institutions must pay to reinsurance intermediaries will be registered and recognized under this line item at the moment that the issuance of premiums taken from the risks or responsibilities assumed is recognized.

(41) Valuation will be carried out in accordance with the amount to be received or delivered in the currency in which the reinsurance operations were concluded. Likewise, the balances of paid claims that are registered in the line item of Participation of Institutions or Foreign Reinsurers for Pending Claims must be recognized in the amount of the current account at the moment that payment of said claims is made.

Advances of Commissions and Profit Participation of Reinsurance

(42) Advances of reinsurance commissions and profit participation must be recognized as a liability in the line item of Insurance Institutions current account or Sureties, as appropriate, for the amount of cash received in excess of the application of the reinsurance or suretyship commission percentages established in the corresponding contracts in relation to the cession of premiums; likewise, such advances will be recognized at the moment that the cession of corresponding premiums is accounted for.

(43) Likewise, an advance will be recognized for the amount of reinsurance commissions that exceeds the amount of the ceded premium corresponding to the same reinsurance contract and period of its validity, so it will be recognized at the moment that the cession of premiums is accounted for or in accordance with accrual based on the validity period of the contract. (by period, it will be understood as that established in the particular or specific conditions of the contract).

(44) In the case of the advance of reinsurance profit participation (account to compare reinsurance income and expense), it will be recognized as a liability for the amount of cash received before the deadline established to determine the reinsurance result in accordance with the conditions established in the corresponding contract, which cannot be less than the validity period of the contract (by period it will be understood, the coverage validity established in the particular or specific conditions of the contract). Reinsurance profits will be attributable largely to the quality of the cedent's underwriting and the certain result of direct insurance, always attending to the substance of the reinsurance contract, its private nature, and the indemnificatory character of uncertain risks.

(45) The valuation of said advances will be carried out in accordance with the amount received and the currency in which the reinsurance operations were concluded.

Provisions for Reinsurance Payments

(46) Premiums for non-proportional reinsurance and suretyship coverage of reinsurance contracts must be recognized in liabilities and in result accounts in accordance with what is stated in Bulletin C-9 "Liabilities, Provisions, Assets and Contingent Liabilities and Commitments" issued by CINIF.

Presentation Standards

(47) Loans and interest from financial reinsurance contracts are presented in assets within Current Portfolio; if they are overdue, they will be presented in Overdue Credit Portfolio, and, if applicable, the estimate for write-off of loans from financial reinsurance contracts.

(48) Financing obtained and interest inherent to financial reinsurance contracts will be presented in liabilities within the line item of financing obtained through financial reinsurance contracts.

(49) In results, it is part of the comprehensive financing result, in the line item of financial reinsurance.

j)
Permanent Investments (B-10)

(1) This section aims to make known the criteria to which Institutions and Mutual Societies must adhere when they hold shares of one or more subsidiaries, for the preparation of consolidated financial statements, in order to know the general financial situation that these Institutions and Mutual Societies have with their subsidiaries, so the Commission considers it convenient to have consolidated financial statements of said corporate groups, which must be formulated in accordance with Financial Information Standards (NIF) B-8 "Consolidated or Combined Financial Statements".

(2) Likewise, for the case of permanent investments that are considered as associates, Institutions and Mutual Societies must adhere to NIF C-7 "Investments in Associates, Joint Ventures and Other Permanent Investments" issued by CINIF, except for the provisions and definitions set forth in this Chapter.

(3) The four basic consolidated financial statements show the financial situation, results, changes in equity and Cash Flows of an economic entity which is composed of the controlling entity and its subsidiaries, which may have an economic figure equal to or different from the controller.

(4) The Institution, Mutual Society that has the status of controlling entity must establish the necessary methodology to allow homogenizing the recording and valuation of operations carried out by subsidiaries, with the records of these Institutions and Mutual Societies, in order to properly carry out the consolidation process, for which they must take into account the following:

1)
Temporary Investments.- Subsidiaries that are not Institutions or Mutual Societies that within their assets have temporary investments, for consolidation purposes must be valued in accordance with the criteria established by this Commission and make the corresponding adjustments;

2)
Real Estate.- Subsidiaries that are not Institutions or Mutual Societies or real estate companies and that have real estate, for consolidation purposes their valuation must adhere to the corresponding NIFs.
Likewise, balances corresponding to "Estimate for Impairment of Long-Term Assets" must be included within the format indicated in criterion C-1, in the line item of "Real Estate" and in results in the line item of investment valuation the balance corresponding to "Impairment Loss";

3)
Other Assets.- Subsidiaries that are not Institutions or Mutual Societies and that have other types of assets not indicated in the minimum catalog referred to in Criterion C-1 of this Annex, for consolidation purposes must form part of the Debtors group in the line item of "Various" or within the line item of "Other Assets", considering the nature of the asset, indicating in a separate row the description of the assets that are incorporated into the minimum catalog, which for this purpose the Institution or Mutual Society will send to the Commission;

4)
Technical Reserves.- In the case that subsidiaries are Institutions or Mutual Societies, the technical reserves that they individually report in their financial statements must sum the reserves originated between them and the controller, subtracting the participation for the concept of reinsurance and/or suretyship that they have operated between them, in view of the fact that the controller will be considered as the total retainer of obligations, and

5)
Other Liabilities.- Subsidiaries that are not Institutions or Mutual Societies and that have other types of liabilities not indicated in the minimum catalog referred to in Provision 38.1.8 of these Provisions, for consolidation purposes must form part of the Creditors group in the line item of "Various" or within the line item of "Other Liabilities" considering the nature of the liability, indicating in a separate row the description of the liabilities that are incorporated into the minimum catalog, which for this purpose the Institution or Mutual Society will send to the Commission.

(5) In the case of income and expenses registered by subsidiaries, different from the operations registered by Institutions and Mutual Societies, for consolidation purposes they must be integrated into other income and other expenses and grouped in the line item of operating and administrative expenses.

(6) For the recognition of transactions in foreign currency and of foreign operations, in the financial statements of subsidiaries that qualify as foreign operations, the provisions set forth in NIF B-15 "Conversion of Foreign Currencies" must be observed, except for what is established in the criteria corresponding to "Estimation of Assets and Liabilities and Off-Balance Sheet Items" and "Availability and Temporary Investments", taking into consideration that Institutions and Mutual Societies carry out specialized operations. Likewise, instead of using the line item of "Changes", within equity the line item of "Accumulated Effect from Conversion" must be included in a separate row.

k)
Technical Reserves (B-11)

Objective

(1) This criterion aims to establish the bases for Institutions and Mutual Societies to carry out the accounting recording of technical reserves, referred to in articles 216 and 220 of the LISF and Title 5 of the CUSF.

Valuation

(2) Institutions and Mutual Societies will constitute and value technical reserves in accordance with what is established in articles 218, 219, 221 and 222 of the LISF, as well as what is stated in the provisions of Title 5 Of Technical Reserves, of this Circular and other applicable provisions.

Recording

(3) Institutions and Mutual Societies must record in their accounting the liabilities for technical reserves and record the corresponding increase or decrease in the result line items contemplated for this purpose in the minimum catalog referred to in Criterion C-1 of this Annex.

(4) Likewise, as provided in articles 224 and 228 of the LISF, the recording of technical reserves must be carried out monthly, for each operation and line of business, or for each line or sub-line of business, in accordance with the result yielded by the valuation.

(5) Technical reserves determined in foreign currency (dollars) must be accounted for in that currency in the corresponding liability in the line items established in accordance with the minimum catalog and in results at the equivalent in national currency at the close of each month.

Reserve for Risks in Course

(6) For the Reserve for Risks in Course of life, accident and health, and damage operations, Institutions must register in the line item of "Reserve for Risks in Course (Valuation at Agreed Technical Rate)" the result of the valuation of said reserve, of those policies in force in the month of valuation in question (t+n) that began their validity in month (t), applying the procedures and principles established in Chapters 5.1 and 5.3., using for the valuation, the conditions and the technical interest rate or rates corresponding to the last business day of said month (t). The recording of the aforementioned reserve will be applied against results in the line item of net increase to the Reserve for Risks in Course. Likewise, in assets, the recoverable amounts of reinsurance must be registered in the line item of "Participation of Institutions or Foreign Reinsurers for Risks in Course (Valuation at Agreed Technical Rate)" and the estimate for non-compliance that must affect results in the concept of preventive write-offs for recoverable reinsurance amounts, established in the minimum catalog referred to in Criterion C-1 of this Annex.

(7) In the month-by-month valuation of the Reserve for Risks in Course of long-term insurance, variations that occur in its value due to differences between the interest rates used for the original calculation ("Agreed Technical Rate") and the market interest rates used for the monthly valuation of the corresponding technical reserve will be determined. These variations will be registered in the line item named "Result in the Valuation of the Reserve for Risks in Course of Long-Term Insurance due to Variations in Interest Rate". Additionally, the corresponding effects in Recoverable Reinsurance Amounts will be registered in the Asset line item named "For Participation of Institutions or Foreign Reinsurers for Risks in Course (Variation at Agreed Technical Rate)".

The "Result in the Valuation of the Reserve for Risks in Course of Long-Term Insurance due to Variations in Interest Rate" must be determined solely by the change in the interest rates employed, so in the first valuation of the Reserve for Risks in Course of long-term insurance in accordance with these Provisions, a valuation must be carried out that identifies the amount that comes from the change in the interest rate employed, as well as the amounts coming from changes in the calculation methodology and demographic hypotheses. For these purposes, Institutions must carry out a valuation with the valuation method registered with the Commission in accordance with these Provisions employing the technical interest rate with which the reserve was being valued before the entry into force of these Provisions ("Agreed Technical Rate"), and compare said amount with the valuation of the reserve applying the market risk-free rate curve corresponding in accordance with these Provisions, understanding that the difference between the amounts obtained with said valuations is the effect that is produced solely by the change in the interest rates employed.

(8) The sum of the line item "Reserve for Risks in Course (Valuation at Agreed Technical Rate)" and the line item "Result in the Valuation of the Reserve for Risks in Course of Long-Term Insurance due to Variations in Interest Rate" will be the value that will be presented in the general line item of "Reserve for Risks in Course", which must be consistent with the valuation of said reserve in accordance with the procedures and principles established in Chapters 5.1 and 5.3., and using for the valuation, the market risk-free interest rate or rates corresponding to the month of valuation (t+n) in question.

(9) Likewise, in congruence with the calculation of the Reserve for Risks in Course, the corresponding recoverable reinsurance amounts will be determined, using the line items of the minimum catalog established for this purpose in this Annex.

(10) Additionally, in equity, in congruence with the recording established for the liability:

(11) The variations that occur in the value of the Reserve for Risks in Course and in the Recoverable Reinsurance Amounts of long-term insurance due to differences in the interest rates employed in their valuation, will correspond to unrealized losses or gains, which could be reversed subsequently depending on the movements of the rates that are employed

for valuation, so their registration must affect the accounting capital in the item "Surplus / Deficit from Valuation of the Long-Term Incurred Risk Reserve".

(12) Likewise, the deferred tax that, if any, is generated from the registration of the variations from the valuation of the Long-Term Incurred Risk Reserve in the item "Deferred Income Tax of the Long-Term Incurred Risk Reserve" will be considered.

Reserves for Pending Obligations

(13) In accordance with what is established in article 303 of the LISF, Institutions and Mutual Societies must keep the record of accidents, maturities, and received claims up to date. Likewise, the reserves for pending obligations shall be valued in accordance with the methodology established for each of them in the respective provisions, and must register the liability in the item of contractual obligations, in the corresponding concept against results, and in the asset, the recoverable amounts of reinsurance and the estimate for default, which must affect the results, in the concepts established for such effect in the minimum catalog referred to in Criterion C-1 of this Annex.

The special mathematical reserve, the reserve for investment fluctuation, the contingency reserve, the catastrophic risk reserve, and those others determined by the Commission.

(14) Their registration must be made in the corresponding liability as well as in their results, in accordance with the methodology established for each of them in the respective provisions and in accordance with the concepts established in the minimum catalog referred to in Criterion C-1 of this Annex.

Surety Reserve in Force

(15) For the Surety Reserve in Force, they must register the total corresponding liability against results in the concept of net increase of the Surety Reserve in Force and in the asset, the recoverable amounts of retrocession and the estimate for default, which must affect the results in the concept of preventive penalties for recoverable amounts of retrocession, established in the minimum catalog referred to in Criterion C-1 of this Annex.

Surety Contingency Reserve

(16) The liability determined in accordance with the respective calculation bases must be registered against their results, in accordance with the minimum catalog. This surety contingency reserve is cumulative and can only cease to increase when so determined by the Commission.

Presentation

(17) According to the formats of the financial statements established in Series III. Criteria relative to the basic consolidated financial statements of the CUSF, the amounts of the technical reserves that Institutions and Mutual Societies register must be presented in the item of Technical Reserves of the Balance Sheet.

Specific Technical Reserves

(18) In order to establish the bases for the accounting recording of the constitution and/or cancellation of the specific technical reserves ordered by CONDUSEF, cited in Chapter 5.18 of this Circular, Institutions and Mutual Societies must make the accounting entry of constitution and/or cancellation of each specific technical reserve, through an individual journal voucher containing the following data:

1)
Constitution of Reserves.

i.
Number of journal voucher for reserve constitution;

ii.
Date of journal voucher for registration of constitution;

iii.
Number of office document issued by CONDUSEF containing the respective order;

iv.
Date of the office document issued by CONDUSEF containing the respective order;

v.
Name of the insured, and

vi.
Constitution of the specific technical reserves, in accordance with the minimum catalog referred to in Criterion C-1 of this Annex, and

2)
Cancellation of Reserves.

i.
Number of journal voucher for reserve cancellation;

ii.
Date of journal voucher for cancellation of reserves;

iii.
Number of office document issued by CONDUSEF with which its constitution was ordered;

iv.
Date of the office document issued by CONDUSEF containing the respective order;

v.
Name of the insured, and

vi.
Cancellation of the specific technical reserves, in accordance with the minimum catalog referred to in Criterion C-1 of this Annex.

(19) The journal vouchers with all the indicated data must be kept available in the offices of Institutions and Mutual Societies, in case the Commission requires the corresponding information and verification.

(20) The Insurance Institution or Mutual Society that has accounted for the specific technical reserves of each month, through a globalizing accounting voucher, must present to this Commission, within the information indicated in this Criterion, corresponding to the "Date of journal voucher for registration of the reserve", the date on which the reserve was registered in the accident register referred to in article 303 of the LISF, provided that the amount of this reserve is part of the respective total amount of the global journal voucher.

Accounting Recording of Additional Benefits of Pension Insurance Derived from Social Security Laws

(21) This section aims to establish uniform criteria for the accounting recording of costs and expenses incurred by authorized Insurance Institutions for the practice of pension insurance derived from social security laws, for the additional benefits they grant, relative to policies whose offers have not been issued through the Offer and Resolution Administrator System referred to in Chapter 14.4 of this Circular.

(22) In the additional benefits to basic pensions that are granted directly by the Insurance Institution and that by their nature originate the constitution or increase of risk reserves in course, these must be registered from the moment the obligation to grant the corresponding benefits arises, and such registration will be charged to results in an item called "Net Increase of the Risk Reserve in Course", sub-items "For Additional Benefits of Direct Insurance", or, "For Additional Benefits of Taken Reinsurance" as applicable, indicated in the minimum catalog referred to in Criterion C-1 of this Annex.

(23) The Insurance Institution must register at the moment the payment obligation for additional benefits arises, the reserve for pending obligations for accidents occurred, charged to results in the item of accidentality and other contractual obligations, in the sub-items called "Accidents for Additional Benefits of Direct Insurance", "For Pensions" and in the sub-item "Accidents for Additional Benefits of Taken Reinsurance", "For Pensions", indicated in the minimum catalog referred to in Criterion C-1 of this Annex.

Premiums in Deposit

(24) They will be represented by all those cash inflows for the concept of payment of insurance premiums and sureties that are received in advance or are pending application, as well as all those deposits registered in the bank accounts of the Institutions whose origin has not been identified, considering that the main source of income of the Institutions corresponds to the collection of premiums.

(25) Premiums in Deposit represent an obligation for the Institutions, so they must be reported in a liability item, which will be decreased when its application is made against the items of premiums receivable.

l)
Off-Balance Sheet Accounts (B-12)

(1)In off-balance sheet accounts, Institutions will register values that do not directly affect nor modify the items of the Balance Sheet and the Statement of Results, and serve for administrative control or reminder purposes, and will be grouped at minimum in the following manner according to the criteria indicated in each case.

1)
Group: Values in Deposit

i.
Values in Custody.- Values received in custody;

ii.
Values in Pledge.- Values received as guarantee for loans granted;

iii.
Seized Assets.- Assets, values, and rights on which the institution has placed a seizure and that are under its responsibility or that of third parties, and

iv.
Collateral of Financial Guarantee Insurance.- Collateral received, whether cash, the Nominal Value of Letters of Credit, the Value or Market Price of securities, titles, or documents, as well as the Cash Flows of securities, with which authorized Institutions have as additional guarantee or backing for the obligations derived from a Financial Guarantee Policy, in accordance with what is established in the Rules of Operation for Financial Guarantee Insurance.

2)
Group: Funds in Administration

i.
Funds for Labor Obligations in Administration.- Register the amount that the insurer administers for these concepts; independently of these records, it must carry out the necessary ones to control this type of operations, by contractor and class of investment;

ii.
Funds in Administration.- Amount that for these concepts the insurer administers; independently of these records it must carry out the necessary ones to control this type of operations;

iii.
Funds Received in Administration of Losses.- Amount of deposits received by the insurer and the expenditures made as a consequence of these operations, must keep an individual record for each contract celebrated;

iv.
Trusts.- Amounts that for these concepts the insurer or surety receives for their administration, must also establish a special accounting for each contract they celebrate, in which they will register the money and other assets, values and rights entrusted to them, as well as the increases and decreases, due to the products or respective expenses, must invariably coincide the balances of the controlled accounts with those of the special accountings, and

Losses borne by the entity due to responsibilities incurred as trustee, will be recognized in results in the period in which they are known, regardless of the moment in which any legal promotion is made for this effect.

The recognition of income from the management of trusts must be made based on what is accrued. The accumulation of such accrued income must be suspended, at the moment when the debt for these presents 90 or more days natural of non-payment, being able to accumulate again when the debt pending payment is liquidated in its entirety.

While the accrued income from the management of trusts is suspended from accumulation and not collected, the control of them will be carried out in off-balance sheet accounts. In case such accrued income is collected, it will be recognized directly in the results of the exercise.

v.
Products in Favor of Settlers in Administration.- Total amount after taxes, in favor of the settlers and before any type of discount by commissions received by insurers or sureties and its balance will be cumulative, must be settled at the end of each social exercise.

3)
Group: Liabilities for Sureties in Force.

Sureties in Force.-
Amount of liabilities borne by the Institution, and

Sureties Ceded in Retrocession.- Amount of liabilities ceded and retroceded in retrocession to national and foreign institutions.

4)
Group: Recovery Guarantees for Issued Sureties and for Surety Insurance.

i.
Recovery Guarantees.- Guarantees granted by the sureties and solidary obligors registered at their fair value, whether by direct issuance or by taken retrocession; must have control of direct sureties separately from those of taken retrocession. For the deposits registered here, accounts of Asset and/or Liability of the institution must not be affected, and

Guarantees granted by debtors for the issuance of surety insurance policies registered at their fair value, whether by direct issuance or by reinsurance; must have control of direct surety insurance certificates separately from those of reinsurance. For the deposits registered here, accounts of Asset and/or Liability of the Institution must not be affected.

ii.
Participation to Retrocessionaires of Recovery Guarantees. Guarantees granted by the sureties and solidary obligors for the retrocession operations ceded and retroceded to other institutions. Must keep control of the sureties they cede from direct and those they cede from taken.

iii.
Participation to Reinsurers of Recovery Guarantees. Guarantees granted by debtors for the issuance of policies and insurance certificates for the operations of ceded and retroceded reinsurance to other institutions. Must keep control of the surety insurance contracts they cede from direct and those they cede from taken.

5)
Group: Received Claims Pending Verification

i.
Received Claims;

ii.
Received Claims that are pending justification taking as maximum limit for its registration the amount of the surety policy. The movements of cancellation will proceed when the claim is paid, it is qualified as improcedent or there is withdrawal. In case there is litigation in the claim, it must remain the registration in this account, and

iii.
Participation of Received Claims.- Amount of participations that correspond to other institutions, for the claims pending justification of surety policies in which ceded and retroceded retrocession has operated.
Must have control over the sureties ceded from direct and ceded from taken.

6)
Group: Contingent Claims

i.
Contingent Claims.- They refer to the registration of received claims that have been presented to the surety and this has knowledge and verification of that there is some litigation between the surety and beneficiary in order to determine the exigibility of the policies, without until that moment being part of the litigation the surety company. Likewise, it corresponds to the registration of those claims in which the surety has determined some lack in the information presented by the beneficiary and is within the period indicated in article 279 of the LISF for its due integration.

Likewise, the amount claimed in excess of the amount covered by the surety policy will be registered, in accordance with the applicable administrative provisions. For the situations that affect the state of the received claims in the surety, the applicable accounting reclassifications must be made in order to keep updated the information regarding said claims, as indicated in the applicable administrative provisions.

Likewise, the amount of contingencies in litigation for sureties granted in public works contracts will be registered, as established in subsection C-1 Claims of the present Circular, and

ii.
Participation of Contingent Claims.- Amount of participations that correspond to other institutions for the contingent claims of surety policies in which ceded and retroceded retrocession has operated. Must have control over the sureties ceded from direct and ceded from taken, as well as of the claims that the institution has verification that there is some litigation between the surety and the beneficiary, without until that moment the surety company being participant in said litigation; and of the claims that are in the process of integration, as well as the claims for amount superior to the amount specified in the respective policy, in accordance with the applicable administrative provisions.

7)
Group: Paid Claims

i.
Paid Claims.- Amount of claims paid by the institution in the exercise due to the responsibilities assumed, and

ii.
Participation of Paid Claims.- Amount of responsibilities paid in the exercise, ceded and retroceded in retrocession to national and foreign institutions. Must have control over the sureties ceded from direct and ceded from taken.

8)
Group: Cancelled Claims

i.
Cancelled Claims of the Exercise.- Amount of claims that the institution cancels in the exercise due to having been determined as improcedent, and

ii.
Participation of Cancelled Claims.- Amount of claims cancelled in the exercise, ceded and retroceded in retrocession to institutions national and foreign.

9)
Group: Recovery of Paid Claims

i.
Recovery of Paid Claims.- Amount of recoveries made in the exercise on the paid claims, and

ii.
Participation of Paid Claims.- Amount of participations corresponding to retrocessionaires for the recoveries that are made in the exercise derived from ceded and retroceded retrocession. Must have control over the sureties ceded from direct and ceded from taken.

10)
Group: Fiscal Loss to Amortize

i.
Fiscal Loss to Amortize.- Corresponds to the pending part to amortize of the fiscal loss.

11)
Group: Reserve to Constitute for Labor Obligations

i.
Reserve to Constitute for Labor Obligations.- Excess resulting from comparing the current net liability with the projected net liability. With the purpose of recognizing the figures relative to each new period, the initial balance of this item must be cancelled at the end of each exercise and, at the same time, if applicable, it will register the excess again determined.

12)
Group: Capital Registration Accounts

i.
Updated Contribution Capital.- Capital contributions made by partners or shareholders and their update, and will be decreased with the capital reductions that are effectuated, in the terms established by the Income Tax Law;

ii.
Subordinated Obligations Issued.- Amount of obligations issued, pending placement, and

iii.
Surplus from Valuation of Capitalized Real Estate.- Amount of surplus whose capitalization will be carried out based on the respective authorizations granted by the National Commission of Insurance and Sureties.

13)
Group: Registration Accounts. Fiscal Registration

i.
Asset to Depreciate.- For fiscal purposes the pending part to depreciate of the depreciable assets;

ii.
Intangible Assets.- For fiscal purposes the pending part to amortize of the intangible assets;

iii.
Fiscal Update Adjustment.- For fiscal purposes the monthly amount of the adjustment or update of the technical reserves, in accordance with what is provided in the Income Tax Law;

iv.
Fiscal Result.- Amount resulting from the combination between the accumulated income, deductible items, non-accumulable items and non-deductible items, and

v.
Net Fiscal Profit to Distribute.- Corresponds to the net fiscal profit of each exercise, as well as the dividends received by the institution from other commercial societies resident in Mexico and is decreased with the amount of dividends or profits that are distributed in cash or in goods, from profits previously registered, in the terms established by the Income Tax Law and for the purposes of the withholdings of said tax that are established in that Law.

14)
Group: Registration Accounts. Various

i.
Uncollectible Accounts.- Amount of Uncollectible Credits that have been written off by the institution, must keep control by lines of business in those cases that so merit;

ii.
Participation of Uncollectible Accounts by Retrocession.- Amount of the participation of sureties paid that have been declared uncollectible by ceded and retroceded retrocession. Must have control over the operations by retrocession ceded from direct and from taken retrocession;

iii.
Purchase of Currency Hedges.- Hedges purchased at their equivalent in national currency at the contracted exchange rate;

iv.
Depositories of Surety Policies to be Issued.- Amount of surety policy allocations that the surety institution makes to its agents, taking as base the amount of the coverage of the policies or by the amount of the current operating margin;

v.
Sanctions to Pay .- represent the fines imposed by the National Commission of Insurance and Sureties, pending payment, even for those sanctions that are in the process of resolution by this Commission, or before other authorities, and

vi.
Unspecified Various Concepts.- All those concepts and operations that do not specifically appear within other off-balance sheet accounts, must establish the pertinent classifications for adequate analysis, through the sub-accounts respective.

15)
Group: Operations with Derivative Products

i.
Acquisition of Option Contracts.- Notional amount of option contracts;

ii.
Rights and Obligations for Future Operations.- Notional amount of the future operations;

iii.
Acquisition of Swaps.- Notional amount of Swap Operations, and

iv.
Acquisition of Forwards.- Notional amount of Forward Operations.

16)
Group: Operations with Securities Granted in Loan

i.
Assets to Receive as Guarantee for Loan.- Amount of assets or values delivered as guarantee for the securities loan operation.

17)
Group: Guarantees Received for Derivatives

i.
Guarantees Received.- Amount of guarantees received for derivative operations.

18)
Group: Guarantees Received for Repo

i.
Guarantees Received for Repo.- Quotation cost of the securities that are in guarantee for repo.

ii.
Accrued Interest Not Collected Derived from Overdue Credit Portfolio.- corresponds to the control of the accrued interest of the Credits of the Overdue Portfolio.

Presentation

(2) Off-balance sheet accounts must be presented at the end of the Balance Sheet for each Group established in this section.

m)
Premiums (B-13)

(1) This criterion establishes the accounting treatment to which Institutions and Mutual Societies must be subject, for the registration of premiums for insurance and surety contracts.

Accounting Recording

(2) Insurance Institutions and Mutual Societies must register in the item that integrates the premiums issued by operation and line of business, the insurance contracts at the moment of the subscription of them by the total premium of the operation, which will be determined by the payments previously defined, or in the case of insurance in which by their characteristics the sum

periodically modified insured, the premium register must be consistent with that period,

against the item of debtors for insurance premiums and in the case of premiums for reinsurance

taken, these will be recorded in results in the month following their issuance in accordance with the

information provided by the cedent, against the item of insurance institutions.

(3) Likewise, premiums issued in advance must also affect results in the item of

premiums issued by operation and line, at the time of the subscription of the insurance contracts,

considering as premiums issued in advance, the issuance that takes place on a

date prior to the effective date of the policy to which such premium corresponds, in

attention to what is established in Provision 5.2.3. of this Circular.

(4) The registered issued premiums included in results consist of at least the following

concepts, according to the operations carried out by Institutions and Mutual Societies:

From Direct:

First-year premiums of direct insurance.- Correspond to first-year premiums of

direct insurance, of the life operation;

ii.

Renewal premiums of direct insurance.- Correspond to renewal premiums in

direct insurance, of the life operation;

iii.

Single premiums of direct insurance.- Correspond to single-payment premiums of direct

insurance, of the life operation and of insurance contracts that have as a basis pension

or survival plans derived from social security laws;

iv.

Premiums of direct insurance.- Correspond to premiums of direct insurance of the

accident and illness and damage operations, and

Direct insurance premiums by subsidy.- Correspond to premiums that by subsidy

granted by the Federal Government for support of agricultural and animal insurance.

Less:

vi.

Returned single premiums of direct insurance.- Correspond to the return of premiums

for improper cases corresponding to pensions that are cancelled as

consequence of a rectification of the social security institutes, IMSS

and/or

ISSSTE.

From Taken:

First-year premiums of taken reinsurance.- Correspond to first-year premiums

for taken reinsurance, of the life operation;

ii.

Renewal premiums of taken reinsurance.- Correspond to renewal premiums

for taken reinsurance, of the life operation;

iii.

Single premiums of taken reinsurance.- Correspond to

single-payment premiums by

taken reinsurance, of the life operation and of insurance contracts that have as a

basis pension or survival plans derived from social security

laws, and

iv.

Premiums of taken reinsurance.- Correspond to

premiums for taken reinsurance, of the

accident and illness and damage operations.

Less:

Returned single premiums of taken reinsurance.- Correspond to the return of

premiums of the taken for improper cases corresponding to pensions that are

cancelled as a consequence of a rectification of the social security institutes,

IMSS and/or ISSSTE.

Ceded Premiums

Accounting Record

(5) Insurance Institutions and Mutual Societies must record in results by

operation and line in the item that integrates ceded premiums, at the time of issuance of the

insurance contracts, in the percentages agreed in the reinsurance contracts, in the case of the

premiums ceded from the taken, the record will be made the month following the issuance of the contracts,

in accordance with the information provided by the cedent, against the item of institutions of

insurance.

(6) The record of the premiums of the reinsurance and surety operations relative to

proportional contracts and facultative business in any of their forms of placement,

must be considered as "ceded premiums" and recorded in the corresponding items.

(7) The ceded premiums in results consist of at least the following concepts, according to

the operations carried out by Institutions and Mutual Societies:

Ceded from Direct

First-year ceded premiums.- Correspond to direct insurance premiums, ceded in

reinsurance, relative to the life operation;

ii.

Renewal ceded premiums.- Result from the renewal of direct insurance premiums

direct, ceded in reinsurance, relative to the life operation;

iii.

Single ceded premiums.- Are single-payment premiums of direct insurance, ceded in

reinsurance, relative to the life operation and of insurance contracts that have as a

basis pension or survival plans derived from social security

laws, and

iv.

Ceded premiums.- Are premiums

of direct insurance, ceded in reinsurance, relative to the

accident and illness and damage operations.

Ceded from Taken

First-year retroceded premiums.- Correspond to premiums of taken reinsurance,

retroceded in reinsurance, relative to the life operation;

ii.

Renewal retroceded premiums.- Result from the renewal of premiums of the

taken reinsurance, retroceded in reinsurance, relative to the life operation;

iii.

Single retroceded premiums.- Are single-payment premiums of taken reinsurance,

retroceded in reinsurance, relative to the life operation and of insurance contracts

that have as a basis pension or survival plans derived from social security

laws, and

iv.

Retroceded premiums.- Are premiums of taken reinsurance, retroceded in reinsurance,

relative to the accident and illness and damage operations.

Surety Premiums

Accounting Record

(8) Institutions must record in results in the item that integrates sureties issued

by surety policies, by line and sub-line, at the time of subscription of the surety contract

against the item of premiums to be collected for sureties issued and in the case of re-surety

taken, these will be recorded in results in the month following their issuance in accordance with the

information provided by the cedent, against the item of surety institutions.

(9) The surety premiums in results consist of at least the following

concepts, according to the lines or sub-lines practiced by Institutions:

Premiums from Direct

Direct surety premiums.- Correspond to premiums for subscription

of direct surety policies of the surety operation.

Less:

ii.

Returned premiums by direct surety.- Are surety premiums returned by the

surety institutions.

Premiums from Taken

Premiums of taken re-surety.- Correspond to premiums for surety policies

from taken re-surety.

Less:

ii.

Returned premiums by taken surety.- Are surety premiums returned by the

institutions.

Ceded Surety Premiums

(10) Institutions must record in results by line and sub-line in the item that integrates

the ceded premiums, at the time of subscription of the surety contract and in the case of the

premiums retroceded in re-surety, in the month following the issuance of the contracts,

in accordance with the information provided by the cedent, against item of surety institutions.

(11) The ceded premiums in results consist of at least the following concepts,

according to the operations carried out by Institutions:

Ceded from Direct

Premiums ceded in re-surety.- Correspond to premiums ceded to re-surers

from the country and from abroad by re-surety.

Less:

ii.

Returned premiums by ceded re-surety.- Correspond to the premiums for policies

of sureties returned in re-surety.

Ceded from Taken

Premiums retroceded in re-surety.- Correspond to premiums of the re-surety

taken retroceded in re-surety.

Less:

ii.

Returned premiums by retroceded re-surety.- Correspond to the premiums by

surety policies returned from the taken by retroceded re-surety.

Costs (B-14)

Acquisition Cost

Objective

(1) The purpose of this criterion is to establish the accounting treatment to which Institutions must be subject

for the recording of the acquisition cost for the intermediation of contracts of

insurance and sureties, as well as commissions for ceded reinsurance and re-surety and other

concepts, in attention to what is established in articles 91, 92, 93, 94, 101, 102 and 361 fraction VII of

the LISF and 1° and 24 of the Regulation of Insurance and Surety Agents.

Accounting Record

Acquisition Cost

(2) When it comes to commissions that Institutions grant for the placement of contracts of

insurance and sureties in the terms of articles 101 and 102 of the LISF, regardless of

its form of payment, the total amount of commissions must be recognized directly in results

at the moment in which the insurance and surety contracts that give rise to them are registered, against

the liability relative to commissions or compensations to accrue and, when premiums have

been collected, its allocation in favor of the agents who have intervened in the

placement of the contracts, in the concepts that for such effect are established in the catalog

minimum.

(3) Commissions for premiums and the participation in profits of reinsurance and re-surety

taken, must be recorded in results in the month in which the information is received, against the

corresponding liability in Insurance Institutions, Current Account, in the understanding that the

commissions for premiums and the participation in profits of reinsurance and re-surety, in no

moment can be higher than the ceded premium.

(4) When it comes to any other compensation that Institutions grant for

the

intermediation of insurance and surety policies, they must be supported with the

documentation that accredits their application and in compliance with Bulletin C-9 of the NIF, must constitute

the corresponding provision, in order to affect the results of the exercise to which its

granting corresponds.

(5) The application of commissions in favor of insurance and surety policyholders, will affect their

results at the time of issuance of the insurance and surety contracts in which

they must specify in the policy and in the corresponding premium receipts, the amount of the

reduction of premiums that corresponds to the total or partial application of the cited commissions.

(6) In relation to the cost of non-proportional reinsurance and re-surety coverage, the

recognition to results will be carried out monthly from the effective date of the

reinsurance contract that gives rise to it in accordance with the cost of the coverage contract, independently

of the payments agreed for the concept of minimum premium and deposit, recognition that must be

reflected against the liability relative to Insurance Institutions, Current Account. Likewise, in the

case that at the end of the coverage period, in accordance with the issued premiums, loss ratio and other

factors, an adjustment in the cost of the coverage charge to Institutions and

Mutual Societies is determined, in compliance with Bulletin C-9 "Liabilities, provisions, liabilities and contingent liabilities

and commitments" of the NIF, they must constitute the corresponding provision in order to

affect the results of the exercise to which the indicated adjustment corresponds.

(7) Likewise, when non-proportional contracts are celebrated that consider in their coverage more

than one line, the costs associated with each of the protected lines must be identified, to

effect of reflecting the specific costs of each of them, precisely in the

accounting record.

(8) Likewise, in this type of contract there must be no participation in profits of reinsurance.

(9) Accounting record of additional benefits of pension insurance derived from the Laws

of Social Security.- When the Insurance Institution grants the additional benefits to the

basic pensions based on contracts celebrated with other Insurance Institutions, it must

record the total amount of the obligation incurred, regardless of its form and term of

payment, applying it to its results in the item "Cost of Premiums for Additional Benefits",

sub-item "Single Premiums", or, "Payable at Determined Term". The obligation pending payment

of these benefits will be recorded in the item "Provisions for Additional Benefits", sub-item

"Single Premiums" and "Payable at Determined Term", therefore the total amount of payments to

be made or of the total obligation incurred, must be applied to the results of the Institution of

Insurance on the date on which the validity of such benefits begins.

(10) In no case can the application of costs or expenses of additional benefits

refer to the present criteria, to the results of subsequent exercises be deferred.

(11) The concept of other acquisition costs will refer to all other disbursements for

administration, development, promotion and placement of insurance and surety contracts, the

which must be recorded in results at the moment they are made. Likewise, payments

and compensations to legal persons for services other than those that the LISF reserves to the

insurance agents, must be recognized directly in results at the moment in which the

insurance and surety contracts that give rise to them are registered, regardless of their form

payment.

Recovery of Acquisition Cost

(12) The commissions that they recover for the concept of ceded premiums in reinsurance and/or

re-surety, will be recorded in their results at the moment in which the

insurance and surety contracts that give rise to them are registered, against their asset accounts in the item of

Insurance Institutions, Current Account, which for such effect are established in the catalog

minimum.

(13) Commissions on premiums of reinsurance and re-surety taken retroceded, must be

recorded in results in the month in which the information is received, against the asset

corresponding to Insurance Institutions, Current Account.

(14) In reinsurance and re-surety contracts in which the payment of the

participation in profits of reinsurance and re-surety ceded has been agreed, it must, if applicable,

provision monthly said participation against results, provision that must be adjusted

quarterly in accordance with the results obtained and the conditions agreed in the contracts of

reinsurance.

(15) In retroceded reinsurance and re-surety contracts, from the taken in which the payment of the

participation in profits of reinsurance and re-surety ceded has been agreed, it

must be recorded in the months in which the information is received, in accordance with the results

obtained and the conditions agreed in the contracts of reinsurance, against the asset

corresponding to Insurance Institutions, Current Account.

Claim Cost

Objective

(16) The purpose of this criterion is to establish the accounting treatment to which Institutions and Mutual Societies must be subject

for the recording of the claim cost and of

claims, due to risks and responsibilities that they assume for the issuance of the

insurance and surety contracts, in attention to what is established in articles 216, 217, 218, 219, 221,

224, 296, 297, 298, 299, 300, 301 and 303 of the LISF.

Accounting Record

(17) Institutions and Mutual Societies, in attention to what is established in articles 301 and

303 of the LISF, must register the accidents, maturities and claims received, as well as

the recoveries that by reinsurance and re-surety contracts they maintain, directly in

results in the item of net claim cost, claims and other contractual obligations in the following sub-items that as minimum are indicated below against the

liability and asset that for such effect are established in the minimum catalog to which reference is made

the

Criterion C-1 of this Annex.

Net Cost of Claims, Claims and Other Contractual Obligations

Claims and Other Contractual Obligations

From Direct Insurance

(18) The cost of claims and maturities of direct insurance will be integrated by the following

concepts:

The Increase to the reserve for dividends and bonuses on policies, which will be

referred to the increases that in accordance with actuarial procedures is determined, in

attention to what is stated in article 342 fraction XII of the LISF;

The adjustment to the reserve for obligations pending to fulfill by accidents occurred

and not reported, which corresponds to the gradual increase of the original reserve and the adjustment of the

exercise in accordance with the estimation of accidents occurred and not reported, in attention to what is

stated in article 217, fraction II, inciso c) of the LISF;

The adjustment to the reserve of adjustment expenses assigned to accidents occurred and not

reported, which corresponds to the gradual increase of the initial reserve and the adjustment of the

exercise in accordance with the estimation of adjustment expenses assigned to the accident, in attention to

what is stated in article 217, fraction II, inciso c) of the LISF;

Accidents of direct insurance, correspond to accidents of direct insurance occurred and

reported during the year, in the case of life operations only accidents by death will be registered

without including additional benefits, likewise, it will be included in this

concept the services by surety guaranteed by those payments of surety premiums when

expressly contracted this benefit in favor of insured who require it in their

opportunity, and the bonuses and the paid maturities of pensions, as well as the quotas and

contributions to the individual account of the retirement insurance of the operations of the insurance of

pensions derived from social security laws;

Accidents by additional benefits of direct insurance, will be referred to accidents

occurred by additional benefits in life operation;

Rents of direct insurance, correspond to rents of direct insurance, payable at

determined term or by life rents due during the year, in the life operation, in

which the operations of pension insurance derived from social security laws are not included;

Maturities of direct insurance, will be referred to endowments and flexible insurance of direct

insurance, expired during the year, of the life operation, in which the operations of the

pension insurance derived from social security laws are not included;

Surrenders of direct insurance, correspond to amounts paid to insured

for the concept of surrender, for cancellation of loans by expiration of policies, encumbered,

of direct insurance, as well as by flexible insurance and private pensions, in which the operations of the pension insurance derived from social security

laws are not included;

Adjustment expenses of accidents of direct insurance. - correspond to all disbursements

paid for the expenses made of direct insurance, derived from adjustments of accidents, as well

as of the expenses made in valuation centers;

10)

The participation of salvages by ceded reinsurance, refers to the amount of the

direct insurance salvages in favor of reinsurance institutions, and

11)

Returns of reserves to the Mexican Institute of Social Security (IMSS) or to the

Institute of Security and Social Services of State Workers (ISSSTE) by

direct insurance, correspond to returns of reserves to IMSS or to ISSSTE

occasioned basically by the events contemplated by the Social Security Law and/or by the

Law of the Institute of Security and Social Services of State Workers that give

by terminated the payment of basic benefits, as well as changes in family status.

From Taken Insurance

(19) The cost of claims and maturities of taken insurance must be recorded in results

in the month in which the information is received, against the corresponding liability of Institutions of

Insurance, Current Account and will be integrated by the following concepts:

The adjustment to the reserve for obligations pending to fulfill by accidents occurred

and not reported by taken reinsurance, corresponds to the gradual increase of the reserve

original and the adjustment of the exercise in accordance with the estimation of accidents occurred and not

reported of taken reinsurance, in attention to what is stated in article 217, fraction II,

inciso c) of the LISF;

The adjustment to the reserve of adjustment expenses assigned to accidents occurred and not

reported by taken reinsurance, corresponds to the gradual increase of the initial reserve and

the adjustment of the exercise in accordance with the estimation of adjustment expenses assigned to the accident

of taken reinsurance, in attention to what is stated in article 217, fraction II, inciso c)

of the

LISF;

Accidents of reinsurance and claims of re-surety by reinsurance and

re-surety taken, refers to

accidents of taken reinsurance occurred during

the year. In life operations only accidents by death will be registered without including

additional benefits; as well as the claims written off, both paid as by which

liability was constituted;

Accidents by additional benefits by taken reinsurance, will be referred to

accidents occurred by additional benefits in life operation;

Rents of taken reinsurance, correspond to rents of taken reinsurance,

payable at determined term or by life rents due during the year, in the operation

of life, in which the operations of pension insurance derived from

social security laws are not included;

Maturities of taken reinsurance, will be referred to endowments and flexible insurance of the

taken reinsurance, expired during the year, in the life operation, in which the operations of the

pension insurance derived from social security laws are not included;

Surrenders of taken reinsurance, correspond to amounts paid to the

insured for the concept of surrender, for cancellation of loans by expiration of policies,

encumbered, of taken reinsurance, as well as by flexible insurance and private pensions of the

taken reinsurance, in the life operation, in which the operations of the

pension insurance derived from social security laws are not included;

Adjustment expenses of accidents of taken reinsurance. - correspond to all

disbursements paid for the expenses made of taken reinsurance, derived from adjustments

of accidents, as well as of the expenses made in valuation centers, by reinsurance

taken;

The participation of salvages by retroceded reinsurance, refers to the amount of the

salvages of taken reinsurance in favor of reinsurance institutions, and

10)

Returns of reserves to the Mexican Institute of Social Security (IMSS) or to the

Institute of Security and Social Services of State Workers (ISSSTE) by

taken reinsurance, correspond to returns of reserves to IMSS or to ISSSTE

caused basically by the events contemplated by the Social Security Law and/or by the Law of the Institute for Social Security and Social Services for State Workers that terminate the payment of basic benefits, as well as changes in family status, by reinsurance taken.

Recovery of Losses, Maturities, and Claims

By Ceded Reinsurance

(20) The recovery of the cost of losses and maturities by ceded reinsurance will be composed of the following items:

The losses recovered by ceded reinsurance correspond to the losses recovered by ceded reinsurance, from direct insurance;

The additional benefits losses recovered by ceded reinsurance correspond to additional benefits losses recovered by ceded reinsurance, from direct insurance. For pensions, the recording will be made in accordance with the applicable administrative provisions;

The life annuities recovered by ceded reinsurance represent the recoverable amounts of life annuities by ceded reinsurance, from direct insurance;

The matured endowments recovered by ceded reinsurance represent the recoverable amounts of matured endowments by ceded reinsurance, from direct insurance;

The surrenders recovered by ceded reinsurance represent the recoverable amounts of surrenders by ceded reinsurance, from direct insurance;

The claim adjustment expenses recovered by ceded reinsurance represent the recoverable amounts for claim adjustment expenses, by ceded reinsurance, from direct insurance, and

The salvage from direct insurance represents the amount of salvage obtained from direct insurance.

By Reinsurance Taken

(21) The recovery of the cost of losses and maturities by reinsurance taken will be composed of the following items:

The losses recovered by retroceded reinsurance correspond to the losses recovered by retroceded reinsurance, from reinsurance taken;

The additional benefits losses recovered by retroceded reinsurance correspond to the additional benefits losses recovered by retroceded reinsurance, from reinsurance taken;

The life annuities recovered by reinsurance represent the recoverable amounts by retroceded reinsurance from reinsurance taken;

The matured endowments recovered by retroceded reinsurance represent the recoverable amounts of matured endowments by retroceded reinsurance, from reinsurance taken;

The surrenders recovered by retroceded reinsurance represent the recoverable amounts of surrenders by retroceded reinsurance, from reinsurance taken;

The claim adjustment expenses recovered by retroceded reinsurance represent the recoverable amounts for claim adjustment expenses, by retroceded reinsurance, from reinsurance taken;

The salvage from reinsurance taken represents the amounts of salvage obtained from reinsurance taken;

The recovery of losses by copayments represent the recoverable amounts charged to insured persons, in the accident and illness operations in the medical expense and health lines, and

The recovery of third-party losses represent the amounts of recoveries made from third parties, of the direct insurance losses.

Recovered Losses from Non-Proportional Reinsurance

By Direct Insurance

(22) The recovery of the cost of losses and maturities by reinsurance taken must be recorded in results in the month in which the information is received, against the corresponding asset of Insurance Institutions, Current Account, and will be composed of the following items:

The losses recovered from non-proportional reinsurance coverage represent the recoverable amounts for excess loss coverage of direct insurance for losses and additional benefits.

By Reinsurance Taken

(23) The losses recovered from non-proportional reinsurance coverage by direct insurance will be composed of the following items:

The losses recovered from non-proportional reinsurance coverage by reinsurance taken represent the recoverable amounts for excess loss coverage of reinsurance taken for losses and additional benefits.

Net Cost of Claims

Claims

By Direct Sureties

(24) The concept of claims by direct sureties will be composed of the following items:

The claims by direct sureties correspond to the claims written off, both paid and on which a liability was established, in accordance with the applicable provisions, in relation to the procedure applicable to debtors for surety liabilities;

The participation of recoveries from reinsurers of sureties corresponds to the recoverable amounts from reinsurers of sureties for claims paid, by direct suretying;

The expenditures for payment of claims, by direct suretying, refers to the payments for claims arising for tax purposes, the amount relative to this concept must correspond to what is registered in the concept of recoveries to be made on paid claims;

The paid guaranteed claims, from ceded suretying, represent the amounts of the guaranteed liabilities corresponding to ceded suretying, for which the right to collect is recognized, in accordance with the applicable provisions, in relation to the procedure applicable to debtors for surety liabilities, of direct suretying, and

The provision for the payment of dividends on policies represent the provisions for the payment of dividends in suretying operations, provided that there is authorization from the National Commission of Insurance and Sureties for such effect.

By Reinsurance of Sureties Taken

(25) The losses recovered from non-proportional reinsurance coverage by reinsurance taken must be recorded in results in the month in which the information is received, against the corresponding asset of Insurance Institutions, Current Account, and will be composed of the following items:

The losses of reinsurance and claims of suretying by reinsurance and suretying taken, refers to the losses of reinsurance taken occurring during the year, for claims written off, both paid and for which a liability was established;

The participation of claims to reinsurers of sureties by reinsurance of sureties taken, corresponds to the recoverable amounts from reinsurers of sureties for claims paid, by reinsurance of sureties taken;

The expenditures for payment of claims, by reinsurance of sureties taken, refers to the payments for claims arising for tax purposes by reinsurance of sureties taken, the amount relative to this concept must correspond to what is registered in the concept of recoveries to be made on paid claims, by reinsurance of sureties taken, and

The paid guaranteed claims, from reinsurance of sureties taken, represent the amounts of the guaranteed liabilities corresponding to retroceded suretying, for which the right to collect is recognized, in accordance with the applicable provisions, in relation to the procedure applicable to debtors for surety liabilities, of reinsurance of sureties taken.

Recovery of Claims

By Ceded Reinsurance of Sureties

(26) The concept of recovery of claims by ceded reinsurance of sureties will be composed of the following items:

Participation of claims to reinsurers of sureties, represent the participation of claims charged to other institutions derived from ceded reinsurance of sureties;

The recovery, corresponds to the amounts of the recoveries made of the claims written off in previous years, by direct sureties;

The release of the surety contingency reserves, corresponds to the release of the contingency reserve in the terms set forth in article 222, fraction II, in relation to article 220 of the LISF;

The recoveries to be made on paid claims, by direct suretying, refers to the payments for claims arising, for tax purposes, the amount registered in this concept must correspond to what is registered in the concept of expenditures for payment of claims, and

The paid guaranteed claims, by direct sureties, correspond to the amounts of the guaranteed liabilities corresponding to direct sureties, for which the right to collect is recognized, in accordance with the criteria of this Circular, regarding debtors for surety liabilities.

By Reinsurance of Sureties Taken

(27) The claims by reinsurance of sureties taken must be recorded in results in the month in which the information is received, against the corresponding liability of Surety Institutions, Current Account, and will be composed of the following items:

The participation of claims to reinsurers of sureties, by reinsurance of sureties taken, represent the participation of claims charged to other institutions derived from retroceded reinsurance of sureties;

The recovery, by reinsurance of sureties taken, corresponds to the amounts of the recoveries made of the claims written off in previous years, by reinsurance of sureties taken;

The disposition of the surety reserves in force and contingency, by reinsurance of sureties taken, corresponds to the amounts disposed of the Surety Reserves in Force and contingency, in the terms set forth in article 222, fraction II, in relation to articles 220 and 223 of the LISF;

The recoveries to be made on paid claims, by reinsurance of sureties taken, refers to the payments for claims arising, for tax purposes, the amount registered in this concept must correspond to what is registered in the concept of expenditures for payment of claims, by reinsurance of sureties taken, and

The paid guaranteed claims, by reinsurance of sureties taken, correspond to the amounts of the guaranteed liabilities corresponding to the sureties of reinsurance of sureties taken, for which the right to collect is recognized, in accordance with the criteria of this Circular, regarding debtors for surety liabilities.

Recovered Claims from Non-Proportional Reinsurance and Reinsurance of Sureties

(28) The recovery of claims by reinsurance of sureties taken must be recorded in results in the month in which the information is received, against the corresponding asset of Surety Institutions, Current Account, and will be composed of the following items:

The recovery from institutions for non-proportional reinsurance of sureties coverage, by direct suretying, corresponds to the amounts of the recoveries derived from non-proportional reinsurance of sureties contracts celebrated by the institutions, and

The recovery from institutions for non-proportional reinsurance of sureties coverage, by reinsurance of sureties taken, corresponds to the amounts of the recoveries derived from non-proportional reinsurance of sureties contracts, by reinsurance of sureties taken, celebrated by the Institutions.

Presentation

(29) According to the formats of the financial statements established in Series III. Criteria relative to the basic consolidated financial statements of the CUSF, the amounts of losses and claims that the Institutions and Mutual Insurance Societies register must be presented in the statement of results in the item of Net Cost of Losses, Claims, and Other Contractual Obligations.

Adjudicated Assets (B-15)

Objective and Scope

(1) It is not the object of this criterion the treatment of assets that are adjudicated to the Institutions and are destined for their use, since for this type of assets the guidelines provided in the accounting criteria applicable to the type of asset in question will apply.

Recognition Standards

(2) When an Institution receives in payment of debts or by adjudication in auction within lawsuits related to Credits in its favor, or when exercising the rights conferred by the operations they celebrate in accordance with the LISF, assets, rights, titles or securities, that they should not keep in their assets, they must sell them within a period of one year from their acquisition, when they are titles or movable goods; of two years when they are urban real estate; and of three years when they are commercial or industrial establishments, or rural real estate. These periods may be renewed by the Commission when it is impossible to effect their sale in a timely manner without great loss to the Institution.

(3) Upon expiration of the periods or, in their case, the renewals granted from them, the Commission will administratively auction the assets, rights, titles or securities that have not been sold;

Valuation Standards

(4) The assets acquired through judicial adjudication must be registered on the date that the approving order of the auction becomes final, by which the adjudication was decreed.

(5) The assets that have been received through dation in payment will be registered, on their part, on the date that the deed of dation is signed, or on the date that formality was given to the transmission of the property of the asset.

(6) The recognition value of the Adjudicated Assets will be equal to their Adjudication Value minus the costs and expenses strictly indispensable that are incurred in their adjudication.

(7) When the value of the asset that gave rise to the adjudication is higher than the value of the adjudicated asset, the difference will be recognized in the results of the exercise as other expenses of the operation.

(8) When the value of the asset that gave rise to the adjudication net of estimates is lower than the value of the adjudicated asset, the value of the latter must be adjusted to the net value of the asset.

(9) At the time of the sale of the Adjudicated Assets, the difference between the sale price and the Book Value of the adjudicated asset, net of estimates, must be recognized in the results of the exercise as other income (expenses) of the operation.

Transfer of the Adjudicated Asset for Use

(10) When opting to transfer the adjudicated assets for use by the entity, such transfer can be made at their adjudication value in the item of the Balance Sheet that corresponds to them according to the asset in question, provided that it is fulfilled that the assets are used for the realization of their object and is carried out in accordance with the investment strategies and purposes of the entity that are previously established in their manuals, there being no possibility that said assets can again be considered as adjudicated.

Presentation Standards

Statement of Results

(11) The result from the sale of Adjudicated Assets, the adjustments to their value, as well as the constitution and adjustment to the respective estimate, will be presented in the item of other income (expenses) of the operation, as appropriate.

(12) The loss from adjudication of assets will be presented in the item of other income (expenses) of the operation.

Derivative financial instruments and hedging operations (B-16)

(1) For the accounting recording of Derivative Financial Operations, they must adhere to what is stated in the minimum catalog referred to in Criterion C-1 of this Annex, to criterion B-2 of these Provisions, as well as what is provided in the Financial Information Standards issued by the CINIF, provided that this is not contrary to what is established in the LISF and in the administrative provisions emanating from it.

(2) With the purpose of reducing the risk exposure of the Institutions and Mutual Societies, and as stated in Provision 8.4.1 fraction II, the Derivative Financial Operations that they carry out may be effected solely and exclusively for hedging purposes. In this sense, all operations with derivative products must be linked to assets affected by the hedging of the Investment Base or that back Admissible Own Funds. In this way, if in a medium or long-term scenario, said assets had to be sold, the derivative products that covered them, must be cancelled or linked to a new instrument that requires this coverage.

The support staff of the Institution or Mutual Society must reconcile daily the confirmations and account statements issued by the intermediaries, with the records of the operators of these products, in order to validate the information that will be accounted for; likewise, they must have auxiliary records in order to clearly identify the Derivative Financial Operations;

The support staff must verify their records daily with those of the operators and compare both databases with the accounting;

The operations described above that the Institutions and Mutual Societies carry out must adhere to the conditions to consider an instrument as a hedge, in accordance with the Financial Information Standard (NIF) issued by the CINIF for such effect, and must be accounted for in accordance with what is provided in the last paragraph of this criterion;

The settlements required in the operation with derivative products, must be carried out by the support staff under authorized instructions and verified amounts, and

For the operations of the recording of derivatives, a detailed control must be kept through auxiliaries for each of the concepts that affect them.

Effects of inflation (B-17)

(1) The Institutions and Mutual Societies must adhere to the guidelines established in NIF B-10, provided that they do not oppose the accounting criteria indicated in the following paragraphs.

(2) When the economic environment is classified as non-inflationary, the Institutions and Mutual Societies must appraise their real estate at least once a year, in accordance with what is provided in Chapter 8.5 of these Provisions, although the effects of inflation will not be recognized for the period in which they are in effect, until a new appraisal is carried out; the increase determined between the difference of the last reexpression against the appraisals, must be registered in the item "Increase by Appraisal of Real Estate" of the asset, against the item "Surplus by Appraisal of Real Estate" of the accounting capital.

(3) In the case that an inflationary environment occurs, the Institutions and Mutual Societies, to adequately reflect the effects of inflation, must consider as non-monetary items the items indicated in the following paragraph and their updating procedure will be carried out as mentioned below.

(4) The following summarizes the main items or non-monetary entries: (i) Real Estate, accumulated depreciation and depreciation of the period; (ii) Reserve for Risks in Course; (iii) Recoverable Amounts from Reinsurers; (iv) Reserve for Catastrophic Risks; (v) Contingency Reserve; (vi) Participation of Reinsurers of Sureties in the Contingency Reserve; (vii) Reserves for Labor Obligations, and (vii) Accounting Capital.

Real Estate

(5) The Institutions and Mutual Societies must carry out appraisals at least once a year, in accordance with the applicable provisions. In the subsequent months until the date on which a new appraisal must be presented, for reexpression purposes, the figure base will be considered the value of the last appraisal carried out.

(6) In the case that the Institutions and Mutual Societies during the non-inflationary economic environment have registered real estate surplus, determined by the difference between the last reexpression and the appraisals that are carried out, the balance reported by the item "Surplus by Appraisal of Real Estate", must be considered in the adjustment that is determined to recognize the accumulated effects of the inflation that existed during all the periods in which there was a non-inflationary environment;

Depreciation

(7) The determination of the depreciation of the exercise, as well as of the accumulated depreciation, must be based both on the updated value of the real estate and on its probable life, determined through technical estimates. To allow adequate comparison, the depreciation system used for updated values and for costs must be congruent, that is, the rates, procedures and probable lives will be equal.

(8) For the determination of the depreciation of the period, the updated value must be taken as a base.

(9) The profits of previous exercises will not be affected by the update of the accumulated depreciation, even if it implies the correction to the estimated life;

Technical Reserves and Reserves for Labor Obligations

Balance Sheet Accounts

(10) The assets and liabilities that are generated by the concept of Technical Reserves and the Non-Monetary Reserve for Labor Obligations mentioned in this Criterion, will be determined under the actuarial valuation procedures and the administrative provisions contained in this Circular, with the technical support of the respective actuarial reports.

(11) In view of the fact that these reserves, at the date of the financial statements, are valued in constant pesos, it is not necessary to make any adjustment for reexpression, and

ii.

Income Statement Accounts

(12) The increase registered in results must contemplate the reexpression adjustment, in accordance with the following:

(13) The reexpression adjustment in the statement of results relative to the net increase of the reserves in question, will be determined by applying to their balance, at the beginning of the year or period, the adjustment factor obtained by subtracting unity from the quotient resulting from dividing the value of the Investment Units (UDI) of the date of the financial statements, by the UDI at the date of closing of the previous year or period.

(14) The adjustment determined in accordance with the above, will be registered with a charge to the temporary account (Correction for Reexpression), and the monetary effect that results in results, in the account of increase of each of the reserves.

Accounting Capital

(15) To update the initial balances of the different items of accounting capital, it will be necessary to decompose each of the lines by age of contributions and retention of profits, applying to each the factors derived from the UDI, which correspond to the exercise in which they originated;

Accounting recording

(16) The accounting recording of the effects of inflation in the financial information must be carried out in separate sub-items, using the same numbers and names of the items contained in the minimum catalog referred to in Criterion C-1 of this Annex,

identifying them using some key or device that allows preparing a trial balance comprising exclusively the sub-items that are updated, which must be consolidated with the historical figures balance to generate a reexpressed figures balance.

Claims (B-18)

(1) Institutions operating Sureties in accordance with Article 303 of the LISF must keep up to date the record of claims received from the beneficiaries of the issued policies. This record will serve as the basis for monitoring the deadlines regarding the integration of the claim, for the payment of the claimed amount.

(2) Institutions operating Sureties must invariably record in their accounting, in the order items "Claims Received" and "Claims Pending Verification", the amounts claimed by the beneficiaries, and these must be reflected in the accounting on the same day they are presented.

(3) In the event that the claimed amount increases to such an extent that it exceeds the secured amount according to the respective policy, the provisions established in paragraphs 10 and 11 of this Criterion must be observed.

(4) Any claim that does not meet the integration requirements specified in fraction VIII of provision 4.2.8 of this Circular, will be registered preventively in the item "Contingent Claims", in the sub-item "Claims Pending Integration", strictly adhering to what is indicated in the first paragraph of paragraph 3 of this Criterion. Claims registered in the sub-item "Claims Pending Integration" will not count for the calculation of the solvency capital requirement.

(5) In accordance with the accounting record indicated in this Provision, Institutions operating Sureties must appropriately affect the sub-items provided in the minimum catalog, in order to clearly and reliably distinguish the origin and status of the respective claim; whether due to the receipt of integrated and pending integration claims, claims in litigation, and contingencies in litigation.

(6) In accordance with Article 279 of the LISF, Institutions operating Sureties will have a period of fifteen natural days counted from the date of receipt of the claim, to request from the beneficiary the information or documentation necessary related to the surety that is the subject of the claim; in this case, the beneficiary has fifteen natural days counted from the date they receive the respective request, to provide the required documentation and information, and if they do not do so within this term, the claim will be considered integrated. Likewise, if Institutions operating Sureties do not exercise the right referred to in this paragraph, the beneficiary's claim will be considered integrated, and the previously made record in the item "Contingent Claims", sub-item "Claims Pending Integration", must be reclassified by transferring it to the item "Claims Received".

(7) In the terms of the previous paragraph, when the claim is duly integrated, Institutions operating Sureties will have a period of up to 30 natural days, counted from the date the claim was integrated, to proceed with its payment or, in its case, to communicate in writing to the beneficiary the reasons, causes, or motives for its total or partial impropriety.

(8) The deadlines indicated in this provision must be considered for the purpose of the constitution of liabilities charged to the results of Institutions operating Sureties for the claims received, in accordance with Article 298 of the LISF and Criterion B-7 Debtors, "II. Debtors by Surety Responsibilities". The recording of the aforementioned liability must be made independently of the permanence of the record of the received claim in order accounts.

(9) When due to judicial or extrajudicial causes, Institutions operating Sureties have knowledge and certainty of the enforceability of payment of amounts exceeding the secured amount, they must also register the aforementioned liability for the corresponding excess amount.

(10) In order to maintain control and follow-up of received claims at all times, in addition to their accounting record, Institutions operating Sureties must have the claim files, which must contain the minimum data expressed in fraction VIII of provision 4.2.8 of this Circular, and the result of the respective evaluation, as well as the payment dates or declaration of impropriety, as appropriate, backed by the relevant supporting documentation.

(11) When there are disagreements on the part of the beneficiaries as a result of evaluations that lead to the impropriety or partial propriety of the received claims, such circumstances must also form part of the file mentioned in this Provision, and in general, they must conserve the documentation of all negotiations carried out between the involved parties.

(12) For the case of received claims determined as proper, Institutions operating Sureties must make the payment to the beneficiary within the period established in fraction I of Article 279 of the LISF. Once the respective payment is made, the record of the order account "Claims Received" will be canceled, adhering to Criterion B-7 Debtors, "II. Debtors by Surety Responsibilities" for the recording of paid claims.

(13) If Institutions operating Sureties resolve the received claim as improper, they must cancel the record in the respective order accounts, and in this case, they must have at least the acknowledgment or received stamp from the beneficiary of the document where the Institution communicates the reasons, causes, or motives for its impropriety.

(14) Claims determined as totally or partially improper during the exercise, in the terms of the previous paragraph, must be registered in the order account "Claims Canceled of the Exercise" and the corresponding cancellation for the participation of reinsurers in the item "Participation of Canceled Claims".

(15) Institutions operating Sureties may determine the partial propriety of the received claim, and must have the elements that justify the amount determined as proper. In this case, they must make the payment to the beneficiary in accordance with what is established by fraction II of Article 279 of the LISF, canceling the record in the order accounts of received claims for the amount covered to the beneficiary. As for the remainder, it must remain in the order accounts of received claims, having Institutions operating Sureties to have at least the acknowledgment or received stamp of the payment made to the beneficiary in order to cancel said amount.

(16) If within 45 business days counted from the receipt of the claims, the Institution operating Sureties has not notified the beneficiary of its impropriety in accordance with what is provided in Article 279 of the LISF, it must create a liability charged to results for the claimed amount. The aforementioned record must also be made at the moment of determining the propriety of payment of the sureties, except in those cases that are in litigation. Regardless of the previous procedure, the Commission may order the constitution of liabilities charged to results, in those claims that so merit;

(17) When there is disagreement on the part of the beneficiary regarding the impropriety or partial propriety determined by Institutions operating Sureties and they have gone before CONDUSEF, submitting to its conciliation, arbitration, or before the competent courts, the registration procedure to be followed will be the following:

The amount registered in the order account "Claims Received" must not be modified, until the arbitration or lawsuit is resolved by a resolution that has become final;

If the arbitral or judicial resolution on the impropriety or partial propriety is against the Institutions operating Sureties, they must make the payment adhering to what is provided in Article 279 of the LISF, as well as to what is provided in Criterion B-7 "Debtors", in the section of Debtors by Surety Responsibilities, and

In the case of resolution in favor of the Institutions operating Sureties regarding the dismissal of improper claims, the total amount registered in the order account "Claims Received" must be canceled. In the case of partial propriety, in addition to this cancellation, Institutions operating Sureties will make the respective payment adhering to what is established in paragraph 5 of this Criterion.

(18) Regarding claims made through judicial or administrative authorities, they must be registered accounting-wise as integrated claims, in the item "Claims Received".

(19) Likewise, Institutions operating Sureties must report quarterly to the Commission on the claims registered in the aforementioned item "Claims Received", in the terms indicated in the regulatory report RR-7.

Surety Institutions must report to the Commission, through Format I indicated in this provision, the initial balance, the increase and decrease movements, and the final balance of all sub-items that make up the balance of the item Received Claims.

Surety Institutions must send to the Commission, in Format II indicated in this provision, a detailed report of the highest amount claims against the institution, in descending order of amount, which together represent at least 80% of the balance of the item Received Claims.

In order for Surety Institutions to comply with the electronic delivery of Formats I and II of this provision, the following instructions for filling them out are made known:

Received claims related to sureties issued without recovery guarantees, for information purposes, will only use the columns named "RAMO", "SUBRAMO" and "Balance of claims of the month being reported", to inform the total balance corresponding to each sub-item without identifying the name of the sureties, in the case that these claims are part of the 80% of the balance of the item Received Claims.

II.

In the column named "No. Surety", the number of the surety and its inclusion or paragraph must be noted.

III.

In the column of recovery guarantees, in the one relative to "Type*", the letter or letters that identify the total guarantees with which each claim has, according to the guarantee type keys described in Format III of this provision, will be noted, and in the "Amount" column, the global sum of said guarantees.

IV.

The initial balance registered in the column named "Balance of claims of the month immediately preceding the one being reported (1)", must coincide with the balance reported in the immediately preceding month in the column of "Balance of claims of the month being reported (1+2-3)", in order for these surety institutions to inform this Commission, in its case, the causes that originated the decrease of these claims.

Likewise, they must include the claims that are necessary to represent at least 80% of the balance of the item Received Claims of the month being reported, which if they are not part of the previous month's report, must be presented in the column of "Increases of claims (1)", notwithstanding that in the records of these surety institutions there are balances in the immediately preceding month, so they must not use the referred column "Balance of claims of the month immediately preceding the one being reported (1)", when it comes to claims that are being registered as increases in the report of the month in question.

In that sense, the sum of each of the lines that make up the "Balance of claims of the month being reported (1+2-3)", together, must sum at least 80% of the balance of the item Received Claims, corresponding to the month being reported.

Format I

RECEIVED CLAIMS GLOBAL

FIGURES AS OF _____ OF ____________________ 20__

SUBACCOUNT / Name of Surety

Balance of claims of the month immediately preceding the one being reported (1)

Movements of claims received in the month

Balance of claims of the month being reported (1+2-3)

Increases of claims (2)

Decreases of claims (3)

RECEIVED CLAIMS

Receipt of Claims. Of the Exercise, for Direct Sureties

Receipt of Claims. Of Previous Years, for Direct Sureties

Receipt of Claims. Of the Exercise, for Reinsurance Taken from the Country

Receipt of Claims. Of Previous Years, for Reinsurance Taken from the Country

Receipt of Claims. Of the Exercise, for Reinsurance Taken from Abroad

Receipt of Claims. Of Previous Years, for Reinsurance Taken from Abroad

Claims in Litigation. Of the Exercise, for Direct Sureties

Claims in Litigation. Of Previous Years, for Direct Sureties

Claims in Litigation. Of the Exercise, for Reinsurance Taken from the Country.

Claims in Litigation. Of Previous Years, for Reinsurance Taken from the Country

Claims in Litigation. Of the Exercise, for Reinsurance Taken from Abroad

Claims in Litigation. Of Previous Years, for Reinsurance from Abroad

TOTAL

Format II

NATIONAL COMMISSION OF INSURANCE AND SURETIES

DETAILED RECEIVED CLAIMS

FIGURES AS OF _____ OF ____________________ of 20__

SUB-ITEM/Name of Surety

No.

Claim

Date

Claim dd/mm/yyyy

No. Surety

Name of

Beneficiary

RAMO

SUB-

RAMO

Amount of

responsibility

of the surety

Recovery

Guarantees

Balance of claims of the month immediately preceding the one being reported (1)

Movements of claims received in the month

Balance of claims of the month being reported (1+2-3)

Amount

Type *

Increases of claims (2)

Decreases of claims (3)

Concept of the decrease (I, P, D, T, S, O)

RECEIVED CLAIMS

Receipt of Claims. Of the Exercise, for Direct Sureties