Amending Circular 6/17 of the Single Insurance and Surety Circular

DOF: 28/06/2017

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

AMENDING CIRCULAR 6/17 OF THE SINGLE INSURANCE AND SURETY CIRCULAR

(Provisions 3.5.6., 8.23.1., 24.1.7., 38.1.3. and 38.1.8.; Annexes 22.1.2. and 38.1.3.)

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, through which, in terms of its First Article, the Law of Insurance and Surety Institutions is issued.

That on December 19, 2014, the Single Insurance and Surety Circular was published in the Official Gazette of the Federation, through which the general provisions emanating from the Law of Insurance and Surety Institutions are made known, systematizing its integration and homogenizing the terminology used, in order to thereby provide legal certainty regarding the regulatory framework to which Institutions, Mutual Societies 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 with the objective of providing greater legal certainty regarding the regulatory framework to which the aforementioned entities must adhere, the National Insurance and Sureties Commission has deemed it necessary to make some modifications and additions related to accounting, technical and operational aspects of the Single Insurance and Surety Circular.

That it is necessary to modify Provisions 3.5.6. and 38.1.3, as well as Annex 38.1.3., of the Single Insurance and Surety Circular, so that the National Insurance and Sureties Commission, as part of its supervisory functions, has knowledge, in a timely manner, of the report that the actuarial function officer presented to the board of directors and to the general management of the Institution or Mutual Society in question, during the first quarter of the year. The foregoing, in order that this Commission identifies the tasks that have been carried out and the phases of the work performed, as well as any problems, recommendations to correct them, and improvement proposals, among others, carried out by the actuarial function officer, and can exercise the necessary regulatory actions, in case of detecting situations or irregularities in the aforementioned report.

That with the purpose that the National Insurance and Sureties Commission knows in a timely manner the information referred to in the previous paragraph, and consequently can act in case there were situations requiring its prompt intervention, it is necessary to carry out the modification to Provision 3.5.6 of the Single Insurance and Surety Circular, since it currently provides that the report prepared by the actuarial function officer will be presented to the board of directors and to the general director of the Institution or Mutual Society, while in Provision 3.5.7., it is established that the evidence of the operation of the actuarial function of said Institutions and Societies, including the respective reports, must be documented and available in case the said Commission requests it for inspection and surveillance purposes.

That the modification to Annex 38.1.3 of the Single Insurance and Surety Circular has as its objective to specify the form and terms in which the report on the results of the dynamic solvency test and the information on the projections of its operation, related to said test, must be delivered. The foregoing, with the objective that Institutions identify possible risks that may affect their satisfactory financial condition and the actions that can be implemented tending to decrease the probability that said risks materialize and, if applicable, the identification of actions that would mitigate their adverse effects.

That the modifications to Provisions 8.23.1., 38.1.3. and 38.1.8. of the Single Insurance and Surety Circular are made with the purpose of providing legal certainty to the form and terms for the presentation before the National Insurance and Sureties Commission of the investment policy approved by the board of directors of insurance institutions and surety institutions, and to assist in the implementation and adaptation of administrative and operational processes, as well as to have the necessary information to carry out the surveillance and supervision activities of said institutions.

That the modifications to Provision 24.1.7 and Annex 22.1.2. of the Single Insurance and Surety Circular are made with the object of homogenizing what relates to the publication in a newspaper of national circulation of the Consolidated Annual Balance Sheet and Statement of Results of insurance institutions and mutual societies and surety institutions, as well as homogenizing what relates to the deadlines to publish on the Internet page of said institutions and societies, the Opinion issued by the external auditor and the Report on Solvency and Financial Condition.

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

AMENDING CIRCULAR 6/17 OF THE SINGLE INSURANCE AND SURETY CIRCULAR

(Provisions 3.5.6., 8.23.1., 24.1.7., 38.1.3. and 38.1.8.; Annexes 22.1.2 and 38.1.3.)

FIRST.- Provisions 3.5.6., 8.23.1., 24.1.7, 38.1.3. and 38.1.8. are modified, to read as follows:

3.5.6.

The actuarial function officer designated by the board of directors must present, during the first quarter of the year, a written report to the board of directors itself and to the general management. In the aforementioned report, the tasks that have been carried out and the phases of the work performed will be documented, and any problems will be clearly identified, formulating recommendations to correct them, as well as improvement proposals. A digitized copy of the aforementioned report must be sent to the Commission as part of the Corporate Governance Regulatory Report (RR-2), in terms of Provision 38.1.3 and Annex 38.1.3.

8.23.1.

Institutions must present to the Commission the document containing the board of directors' agreement stating the approved investment policy. Such delivery must be made as part of the Corporate Governance Regulatory Report (RR-2) referred to in Chapter 38.1 of these Provisions.

If the board of directors makes modifications to the Institution's investment policy, these must be reported to the Commission within twenty business days following the date of the corresponding agreement and their delivery will adhere to the procedure indicated in Chapters 39.1 and 39.6 of these Provisions.

24.1.7.

...

Likewise, prior to the approval of the board of directors, the Consolidated Annual Balance Sheet and Statement of Results, as well as the information referred to in Provision 24.1.8, must be published in a newspaper of national circulation, within forty-five business days following the closing of the respective fiscal year.

38.1.3.

...

I. to V.

...

VI.

The board of directors' agreement of the Institution stating the approved investment policy, in terms of what is provided in Provisions 8.1.1 and 8.23.1, as well as sending the approved investment policy;

VII.

The annual report on Reinsurance or Surety contracts that encompass Financial Reinsurance operations, referred to in Provisions 9.5.16 and 9.7.11;

VIII.

The annual report on risk transfer operations of portions of technical insurance risk portfolios to the securities market (TRS) in force, referred to in Provisions 9.6.15 and 9.7.12., and

IX.

The report of the actuarial function officer referred to in Provision 3.5.6.

The Corporate Governance Regulatory Report (RR-2) will be presented annually, in accordance with what is indicated in Annex 38.1.3, within one hundred forty-five business days following the closing of the fiscal year, and its delivery will adhere to the procedure indicated in Chapters 39.1 and 39.3 of these Provisions.

38.1.8.

...

The following information and documentation must be presented within fifteen business days following the closing of each quarter, with the exception of the information for the fourth quarter, which must be presented within the first twenty business days following the closing of the fiscal year:

Reports related to the general scheme of financial statements, containing:

Catalog:

Minimum Balance Sheet Catalog;

ii.

Minimum Statement of Results Catalog;

iii.

Cash Flow Statement, and

iv.

Statement of Changes in Equity and Capital, and

Consolidation reports;

Reports relating to the concepts that make up the financial statements, containing:

Assets:

Investments in securities;

ii.

Financial Derivative Operations;

iii.

Real estate investments;

iv.

Other assets, and

Reinsurers;

Liabilities:

Creditors, and

ii.

Other liabilities;

Capital:

Social capital, and

ii.

Contributions for future increases in capital;

Off-balance sheet accounts, and

Statement of Results:

Premiums;

ii.

Acquisition costs;

iii.

Analogous and related operations;

iv.

Claim costs;

Claims;

vi.

Operating costs, and

vii.

Integral financing result;

Determination of the Investment Base by currency and term of Institutions and Mutual Societies, as well as detailed information on the assets and investments backing them;

The proof of the determination and coverage of the minimum paid capital;

The classification by levels of Admissible Own Funds, as well as the level of sufficiency of said funds with respect to the RCS, and

The annual opinion issued by the Ministry of Health provided for in article 306 of the LISF, as part of the delivery corresponding to the first quarter of each year;

II.

...

The Short Report of the annual consolidated basic financial statements, and

The Opinion Letter on the situation and sufficiency of technical reserves, and

III.

...

SECOND.- Annexes 22.1.2. and 38.1.3. of the Single Insurance and Surety Circular are modified.

TRANSITORY PROVISIONS

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

SECOND.- In accordance with what is established in the first paragraph of Article Fifth 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 administrative acts of a general nature to which article 69-H of the Federal Administrative Procedure Law applies", published in the Official Gazette of the Federation of March 8, 2017, with the issuance of this Amending Circular, the National Insurance and Sureties Commission indicates the regulatory obligations that are modified with the purpose of giving due compliance to what is ordered in the aforementioned Agreement:

1.- The second paragraph of Provision 24.1.7 of the Single Insurance and Surety Circular is modified in order to establish that the publication of the Consolidated Annual Balance Sheet and Statement of Results of the institutions, as well as the information referred to in Provision 24.1.8, must be published only in a newspaper of national circulation, within forty-five business days following the closing of the respective fiscal year, eliminating the requirement that such publication must be additionally made in the Official Gazette of the Federation.

2.- The second paragraph of Provision 38.1.3 of the Single Insurance and Surety Circular is modified with the objective of extending the deadline with which institutions have to present the Corporate Governance Regulatory Report (RR-2) which is presented annually, within one hundred thirty business days following the closing of the fiscal year. Regarding this, the aforementioned deadline is extended to one hundred forty-five business days.

3.- Provision 38.1.8 of the Single Insurance and Surety Circular is modified with the purpose of eliminating the presentation of the parameters of the investment policy approved by the board of directors of the institutions, as part of the Financial Statements Regulatory Report (RR-7).

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, June 20, 2017.- NATIONAL INSURANCE AND SURETIES COMMISSION.- In the absence of the President of the National Insurance and Sureties Commission, based on article 46 of the Internal Regulations of this Commission, the Vice President of Institutional Operation, Gerardo Lozano de León. - Signature.

ANNEX 22.1.2.

ACCOUNTING CRITERIA APPLICABLE TO INSTITUTIONS, MUTUAL SOCIETIES AND HOLDING COMPANIES

CONTENTS

Glossary of Terms.

Series I.
Criteria relating to the general scheme of accounting.

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

b)
Application of particular standards (A-2).

c)
Application of general standards (A-3).

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

a)
Availability (B-1).

b)
Investments in securities (B-2).

c)
Securities lending (B-3).

d)
Repos (B-4).

e)
Loans (B-5).

f)
Real estate (B-6).

g)
Debtors (B-7).

h)
Accounts receivable (B-8).

i)
Reinsurers and surety reinsurers (B-9).

j)
Permanent investments (B-10).

k)
Technical reserves (B-11).

l)
Off-balance sheet accounts (B-12).

m)
Premiums (B-13).

n)
Costs (B-14).

o)
Adjudicated Assets (B-15).

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

q)
Effects of inflation (B-17).

r)
Claims (B-18).

s)
Salvage (B-19).

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

u)
Analogous and related operations (B-21).

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

w)
Leases (B-23).

x)
Coinsurance Operations (B-24)

Series III
Criteria relating to consolidated basic financial statements.

a)
Minimum catalog (C-1)

b)
Balance sheet (C-2);

c)
Statement of results (C-3);

d)
Cash flow statement (C-4);

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

f)
Financial Statements of Holding 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 those owed for the return or cancellation of sureties issued, when so agreed.

(2) Significant Business Activity, that operation or line of business 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 real estate that as a consequence of overdue debts, or well of an account, right or uncollectible item, the Institution:

1)
Acquires through judicial adjudication, or

2)
Receives through deed in lieu of foreclosure.

(4) Overdue Portfolio, in accordance with Provision 8.14.69. Fraction I, is that which is composed of credits whose borrowers are declared in commercial bankruptcy, or well, whose principal, interests 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 up to date in their payments of both principal and interest, as well as those with overdue principal or interest payments that have not met the assumptions provided in this criterion to consider them 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 party.

(8) Leading Coinsurer, will be that insurance institution that is in charge of processing the delivery of the insurance policy(ies) to the insured party, manage the collection of the total amount, pay the agent their commission, attend to claims and, if applicable, make the corresponding payment and market the salvage, on behalf of him and the other coinsurer, who in turn will have the obligation to cover the expenditures that by concept of Coinsurance administration have been agreed 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 well, regarding 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 in the surety policy it has been expressly agreed that its exigibility will be subject to the fact that in the means of defense promoted by the surety a final decision is issued on the principal obligation and, in addition, the law allows this agreement.

(11) Amortized Cost, the acquisition cost of a financial asset or liability at initial recognition less 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 less 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 the 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 the services provided by operations of: fund administration, medical services administration, payment services provider administration, as well as the provision of health services 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 the administration of losses, 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 coming 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 sureties issued.

(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 the premiums, or in the case of not having been collected within a one-year period following its registration, the constituted estimate can be cancelled against the corresponding asset.

(19) Preventive Estimate for Credit Risks, an effect that is made against the results of the fiscal year and 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 shall not be considered Cash Flows, since these components are part of the management of the entity's cash and cash equivalents, rather than its operating, investing, or financing activities.

(21) Urban Real Estate of Regular Products, those real estate properties that generate a product derived from their lease to third parties and those that, even when used for the Institution's or Mutual Society's own use, consider an imputed rent calculated based on a fair rental appraisal carried out for this purpose by a Credit Institution or public broker, 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, through the application of 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, over 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, shall 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 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.

(24) Restructuring, is that operation that results 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 according to the original terms of the Credit, unless such grant is made at the maturity of the Credit, in which case it will be considered a renewal.

(25) Renewal, is that operation in which the term of the Credit is extended during or at its maturity, or it is settled at any time with the proceeds from another Credit contracted with the same entity, in which the same debtor or another person who constitutes common risks due to their patrimonial links 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 Instruments, those financial instruments that in addition to constituting an account receivable on one part and an account payable on the other, have a determined term and generate Cash Flows for the holder of the instruments over the term of said instruments.

(28) Book Value, the balance of an investment in a security, including adjustments for valuation results, accrued interest, unpaid dividends, impairment loss, or any other adjustment corresponding 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 security quoted in the Mexican market shall be that provided by price providers. In the case of securities quoted on international exchanges, the Market Value or Price shall be that made known by said organizations (price providers) through official publications.

(30) Fair Value,

the amount for which a financial asset can be exchanged or a financial liability settled, between knowledgeable and willing parties 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 daciones en pago (payment in kind), it shall be the price agreed upon by the parties. In the case of goods promised for sale or with reservation of ownership, it shall be reduced by the payments received on account of the good.

(32) Nominal Value,

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

operation.

(33) Probable Life of the Real Estate, the remaining useful time marked by the corresponding appraisal, from its date of preparation.

Series I. Criteria relative to the general scheme of accounting.

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 Information Standards (NIF), was defined by the Mexican Council of Financial Information 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 a specific accounting criterion, 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 the Inspection and Surveillance of 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 regulation 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 the CINIF or by the Commission, the bases for subsidiarity provided for in NIF A-8 shall be applied, considering:

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

ii.

That the standards that have been applied in the subsidiarity process shall be replaced, at the moment that a specific accounting criterion is issued by the Commission, or an NIF, on the subject in which said process was applied.

(6) Institutions and Mutual Societies that follow the subsidiary 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 subsidiarily, 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 result necessary for 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 the 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 its case, disclosure, established by the CINIF. In virtue of this, Institutions and Mutual Societies, while observing what is established in the NIF mentioned at the beginning of this criterion, must 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 carried out 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 recording of their operations, accounting changes, or any other situation that by 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 of considering it impracticable to carry out the correction of errors for all previous affected periods, or the effects for a specific period, they will 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 must 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 of the 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 that is managed;

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 on 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 purposes the sub-item Changes, belonging to the item of Exchange Result indicated in the minimum catalog referred to in 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, it will not be necessary to have said authorization.

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 comes to 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 mechanisms for the transfer of risks and responsibilities " of these Provisions.

iii.

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

iv.

Non-convertible subordinated obligations and other Credit Instruments .- The non-convertible subordinated obligations and other Credit Instruments issued by the entity must be recorded as a liability; likewise, it will record the amount to be paid for the obligations and other Credit Instruments issued according to the Nominal Value of the instruments.

It will record the amount of accrued interest payable derived from the debt instruments issued by the institution in the sub-item of Accruals for Interest on Subordinated Obligations of Mandatory Conversion to Capital, belonging to the item of Various Creditors, indicated in the minimum catalog referred to in Criterion C-1 of this Annex, corresponding to the issuance of debt instruments.

In the case of issuance and placement expenses for obligations not susceptible to being 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 recorded as an expense of the exercise in which the obligations are redeemed.

Bulletin C-11 " Equity Capital ".- For the case of real estate properties 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-lived assets and their disposal ".-

For the case of real estate properties 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 recording 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 must be registered as restricted assets, remaining in the same item from which they originated. Likewise, it will be considered that they form part of this category, those assets arising from operations that are not settled on the same day, that is, received with a value date different from the date of agreement.

Clearing Accounts.- The amount of overdue operations to be collected 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 must be registered in clearing accounts, once they reach their maturity and while the corresponding settlement is not perceived, as agreed in the respective contract.

Likewise, for operations in which immediate settlement or same-day value date is not agreed upon, including foreign exchange sales and purchases, on the date of agreement, the amount to be collected or to be paid must be registered in clearing accounts, until their settlement is effected. In cases where the amount to be collected is not realized within 30 natural days following the date on which it was registered in clearing accounts, it shall be reclassified as Overdue Portfolio and the estimation for uncollectibility or difficult collection must be constituted simultaneously for the total amount thereof.

Accrued but unrealized interest.- Accrued interest for the different asset or liability items must 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 arising from foreign exchange sales and purchases, investments in securities, repurchase agreements, securities lending, derivatives, and issued securities, shall be carried out on the date the operation is agreed upon, 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 arising from foreign exchange sales and purchases, investments in securities, repurchase agreements, securities lending, derivatives, and issued securities, shall be carried out on the date the operation is agreed upon, 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 relative to the specific concepts of insurance and surety operations.

Availability (B-1)

Objective

(1) In this section, the particular criteria for the application of the standards relative to the recording, 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 the cash and cash equivalents indicated in NIF C-1.

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

Valuation Standards

(4) In the case of minted precious metals, they 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 agreement of the sales and purchase operation shall be recognized on said date of agreement 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 must be a clearing account to be collected 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 since they were deposited, and those that having been deposited have been subject to return, must be carried against the item that gave rise to them; in the case of not being able to identify it, their registration must be recognized in the item of various debtors. Once forty-five days have passed after 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 they do not have compensation 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 the standards relative to the recording, 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 in the first instance to what is established in this criterion, as well as to what is provided in NIF C-2 " Financial Instruments " of 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) 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 that are obtained by the holding or alienation of investments;

Establish guidelines for the transfer between categories of financial assets, and

Recognition of impairment of securities investments, and

(3) The following topics are not subject to 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", as referred to in 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 NIF C-2, at the time of acquisition, financial instruments must be classified for valuation and recording within one of the following categories:

Trading Securities,

Hold-to-Maturity Securities, or

Available-for-Sale Securities.

(5) The classification among the categories referred to in this fraction shall be made by the administration of the Institutions and Mutual Societies, based on their investment policy, the intention held regarding the securities, as well as the financial capacity or ability to maintain the investment. The Hold-to-Maturity Securities category shall be exclusively for Insurance Institutions that operate Pension Insurance, considering the nature of their obligations and what is stated in paragraphs 20, 56 and 57 of this Criterion.

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

Trading Debt Securities

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

Recognition Rules

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

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

Valuation Rules

(10) Trading Debt Securities shall be valued at their Fair Value, based on market prices provided by price providers or specialized official publications in international markets. In the event that these do not exist, the last price recorded within the 20 business days prior to the valuation date shall be taken; such valuation must be performed at the close of each month. If no quotation exists according to the previous timeframe, the Acquisition Cost shall be taken as the updated price for valuation.

(11) The accrual of yield from Debt Securities (interest, coupons, or equivalents) shall be determined in accordance with the Effective Interest Method. Such yields shall be recognized in the statement of results. At the moment when accrued interest is collected, the securities investment item shall be reduced against the cash and cash equivalents item.

(12) On the date of 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 securities that are disposed of, which had been previously recognized in the results of the period, shall be reclassified as part of the buy-sell result on the date of sale.

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

(15) In the case of operations comprising two or more accounting periods of recording, 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 recognized before the investment is redeemed or sold shall be considered unrealized and, consequently, shall not be subject to capitalization or distribution of dividends among its shareholders until they are realized in cash.

(16) The gain or loss from exchange arising from securities investments denominated in foreign currency shall be recognized in the results of the period, considering for such purposes the sub-item "Changes", belonging to the item "Exchange Result" indicated in the minimum catalog referred to in Criterion C-1 of this Annex.

Hold-to-Maturity Debt Securities

(17) Only Insurance Institutions specialized in Pension Insurance that have the intention and financial capacity to maintain them to maturity, without prejudice to their liquidity, and where there are no legal or other limitations that could impede the original intention, may classify securities in the Hold-to-Maturity Debt Securities category.

(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 and 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 Rules

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

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

Valuation Rules

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

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

(23) Likewise, the accrual of yield from Debt Securities (interest, coupons, or equivalents) shall be performed in accordance with the Effective Interest Method. Such yields shall be recognized in the statement of results. At the moment when accrued interest is collected, the securities investment item shall be reduced against the cash and cash equivalents item.

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

(25) In the case of operations comprising two or more accounting periods of recording, the amount to be reflected as a valuation result shall be the difference resulting between the last Book Value and the new value determined. Valuation results recognized before the investment is redeemed or sold shall be considered 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 from exchange arising from securities investments denominated in foreign currency shall be recognized in the results of the period, considering for such purposes what is stated in the minimum catalog referred to in Criterion C-1 of this Annex.

Available-for-Sale Debt Securities

(27) Available-for-Sale Debt Securities 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 Rules

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

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

Valuation Rules

(30) Available-for-Sale Debt Securities shall be valued at their Fair Value, based on market prices provided by price providers or specialized official publications in international markets. In the event that these do not exist, the last price recorded within the 20 business days prior to the valuation date shall be taken; such valuation must be performed at the close of each month. If no quotation exists according to the previous timeframe, the Acquisition Cost shall be taken as the updated price for valuation.

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

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

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

(34) The gain or loss from exchange arising from securities investments denominated in foreign currency shall be recognized in the results of the period, 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-traded Debt Securities shall be valued at their Fair Value, which must be obtained using Technical Determinations of Fair Value. Interest, premiums, and/or discounts generated by these instruments must be recognized in the results in the period as they accrue.

Trading Equity Securities

(36) Trading Equity Securities are those that the administration of the Institution, Mutual Society, or Holding Company holds 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 Rules

(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 the securities shall be recognized in the results of the period on the date of acquisition.

Valuation Rules

(39) Investments in traded equity securities shall be valued at their Fair Value, based on market prices provided by price providers or specialized official publications in international markets. Only in the event that these do not exist, the last price recorded 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 be carried to results. In the case of operations comprising two or more accounting periods, the amount to be reflected as gain or loss from 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 recognized before the investment is sold shall be considered 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 from exchange arising from securities investments denominated in foreign currency shall be recognized in the results of the period, 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 disposed of, which had been previously recognized in the results of the period, shall be reclassified as part of the buy-sell result on the date of sale; for those securities acquired in previous periods whose valuation was already recognized in those years, on the date of sale only the difference shall be reclassified as part of the buy-sell result.

Available-for-Sale Equity Securities

(44) Available-for-Sale Equity Securities 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 objective of obtaining gains based on their changes in market value and not only through the yields inherent to them.

Recognition Rules

(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 the securities shall be recognized as part of the investment.

Valuation Rules

(47) Investments in traded shares shall be valued at their Fair Value, based on Market Prices provided by price providers or specialized official publications in international markets. In the event that these do not exist, the last price recorded within the 20 business days prior to the valuation date shall be taken. If no quotation exists according to the previous timeframe, 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 shareholders' 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 recognized before the investment is sold shall be considered 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 from equity securities for trading and available for sale shall be recognized in the corresponding category, against the results of the period, at the moment when the right to receive payment is generated. When dividends are collected, the investment shall be reduced against the cash and cash equivalents item.

Transfers of Categories

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

Financial Instruments for Trading Purposes

(54) 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 event that a financial instrument is in a market that, due to unusual circumstances beyond the control of the entity, loses the characteristic of liquidity, such 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 categories of financial instruments, the following shall be observed:

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

Financial instruments classified as available for sale, transferred to the held-to-maturity category, the unrealized gains or losses, while maintained in their original available-for-sale category and recognized as an item within shareholders' equity, shall remain in this same item, but shall be amortized during the remaining life period 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 hold-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 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:

Letter indicating the reasons for such early sales;

Copy of the accounting vouchers of the movements made, and

Minutes or agreement of the investment committee where the approval of the early sales made is recorded.

Liquidating Accounts

(60) Regarding operations carried out by Institutions and Mutual Societies in matters of securities investments, 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 overdue operations receivable or payable shall be recorded 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 buy-sell operation and that have been assigned, that is, identified, shall be recognized as restricted securities (to be received) at the time of agreement, while, the sold titles shall be recognized as an outflow of securities investments (to be delivered). The counterpart shall be a liquidating account, receivable or payable (creditor or debtor), as appropriate, in accordance with what is established in criterion A-3 "Application of general rules", of this Annex.

Impairment of Securities

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

Securities Lending (B-3)

Objective

(1) This section aims to define the particular rules 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 account.

Recognition and Valuation Rules

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

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

(4) Regarding financial assets received as collateral, these shall be recognized in off-balance sheet accounts, following for their valuation what is stated in criterion B-2 of this Annex.

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

Presentation Rules

(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.

Repurchase Agreements (B-4)

Objective

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

Recognition and Valuation Rules

(2) On the date of contracting the repurchase agreement operation, acting as the Repo Provider, the Institution or Mutual Society must recognize the outflow of cash or a

creditor liquidator, registering the debtor by repurchase measured initially at the agreed price, which represents the right to recover the cash delivered.

(3) During the life of the Repurchase, the repurchase debtor referred to in the preceding paragraph shall be valued at its Amortized Cost, by recognizing the Premium in the results of the fiscal year as it accrues, in accordance with the Effective Interest Method, affecting the corresponding repurchase debtor during the term of the operation.

Presentation Standards

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

(5) In the event that the reported party fails to meet the conditions established in the contract, and therefore cannot claim the collateral, the institution or society as the Reporting Party must recognize in its General Balance Sheet the entry of the collateral, according to the type of asset involved, against the aforementioned repurchase debtor.

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

(7) The off-balance sheet accounts recognized for received collateral must be cancelled when the Repurchase operation reaches maturity or there is default by the reported party.

Loans (B-5)

Objective and Scope

(1) This section aims to define the specific standards regarding the recognition, valuation, and presentation in 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 related to the Preventive Estimate for Credit Risks.

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

The establishment of the methodology for the rating and constitution of the Preventive Estimate for Credit Risks, and

The accounting standards related to securities issued in series or in bulk, which are quoted on recognized markets and which the entity holds in its own position, even if they are linked to Credit operations, being subject to the "Investments in securities" criterion, as provided in Title 22 of the General Provisions derived from the LISF.

Recognition and Valuation Standards

(4) The balance to be recorded 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 payment schedule shall be added.

(5) The Outstanding Balance of Credits denominated in Minimum Wage Multiples (VSM) shall be adjusted based on the corresponding minimum wage, recording the adjustment for the increase against a Deferred Credit, which shall be recognized in the results of the fiscal year in the proportion corresponding to a 12-month period as interest income. In the event that there is a modification to said minimum wage before the end of the 12-month period, the remaining balance to be amortized shall be brought to the results of the fiscal year in the interest income line on that date.

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

Partial Payments in Kind

(7) Partial payments received in kind to cover accrued or, if applicable, due amortizations (principal and/or interest) shall be recorded in accordance with the accounting criterion C-3 "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 recorded as a Deferred Credit, which shall be amortized against the results of the fiscal year as interest income, under the straight-line method during the life of the Credit.

(9) This category shall not include commissions recognized after the initial granting of the Credit, those incurred as part of the maintenance of such Credits, nor those charged in connection with Credits that have not been placed. Likewise, any other type of commission not included in the preceding paragraph shall be recognized on the date it is generated against the results of the fiscal year in the commissions and fees charged line.

Associated Costs and Expenses

(10) Costs and expenses associated with the initial granting of the Credit 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 commissions charged is recognized.

(11) For the purposes of the preceding paragraph, costs or expenses associated with the initial granting of the Credit shall be understood only as those that are incremental and directly related to activities carried out by Institutions and Mutual Societies to grant the Credit, for example, the credit evaluation of the debtor, evaluation and recognition of collateral, negotiations for the terms of the Credit, preparation and processing of Credit 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 customers, administration of existing Credits (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 accrue in the line corresponding to the nature of the cost or expense.

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

Transfer to Past-Due Portfolio

(14) The Outstanding Balance in accordance with the conditions established in Credit contracts shall be registered as Past-Due Portfolio when:

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

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

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

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

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

(17) Renewals in which the borrower has not settled in time the total of accrued interest in accordance with the terms and conditions originally agreed, and 25% of the original amount of the Credit, 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 Credit, the 25% referred to in the preceding paragraph shall be calculated on the original amount of the Credit 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 Credit 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 Credits by capitalizable lease operations, shall be suspended at the moment the Outstanding Balance of the Credit is considered past-due.

(20) For those Credits 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 Credit 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 line, cancelling in the case of capitalizable lease the corresponding Deferred Credit.

Uncollected Accrued Interest

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

(23) In the case of past-due Credits where, in their Restructuring, the capitalization of previously recorded uncollected accrued interest in off-balance sheet accounts is agreed, the entity shall create an estimate for 100% of said interest. The estimate may be cancelled 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 recorded monthly, affecting the preventive estimates for credit risks line of the asset against the sub-line of preventive write-offs for credit risks which is part of the Integral Financing Result line, in accordance with 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 Credit should remain in the General Balance Sheet or be written off. Such Write-off shall be carried out by cancelling the Outstanding Balance of the Credit against the Preventive Estimate for Credit Risks. When the Credit 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 Credits 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 Credit against the Preventive Estimate for Credit Risks.

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

Discounts, Forgiveness, Bonuses, and Discounts on the Portfolio

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

Credits Denominated in Foreign Currency, VSM, and UDIS

(29) For the case of Credits denominated in foreign currency, in Minimum Wage Multiples, and in UDIS, the estimate corresponding to said Credits 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 in accordance with the methodologies established for each type of Credit, the differential shall be cancelled on the date the next rating of the type of Credit in question is carried out against the results of the fiscal year, affecting the same concept or line that originated it, that is, the Preventive Estimate for Credit Risks. In cases where the amount to be cancelled is greater than the registered balance of said estimate in the results of the fiscal year, the excess shall be recognized as other income (expenses) of the operation.

Presentation Standards

(31) General Balance Sheet

Loans or Credits shall be grouped into current and past-due, according to the type of Credit, that is, Credits, unrestricted 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;

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

It shall be presented as part of the portfolio of insured Credits, the financial asset that represents the financing granted to the assignee referred to in the portfolio subject to securitization;

The effect of the adjustment of Credits in Minimum Wage Multiples referred to in this criterion shall be presented as part of the Credit portfolio;

The deferred charge for costs and expenses associated with the initial granting of the Credit shall be presented in a sub-line of other assets;

The financial income to accrue and commissions charged for the initial granting of the Credit shall be presented in a sub-line of Deferred Credits;

The amount of Credits from capitalizable lease operations, both current and past-due, shall be presented net of Deferred Credits;

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

The liability for deposit collateral shall be presented in a sub-line of other accounts payable;

10)

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

11)

It shall be presented in off-balance sheet accounts, in the line of uncollected accrued interest derived from past-due Credit portfolio, the amount of uncollected accrued interest derived from Credits that remain in Past-Due Portfolio, as well as the financial income accrued derived from Credits in capitalizable lease operations.

Statement of Results

(32) Interest income shall be grouped as accrued interest, the amortization of interest collected in advance, the accrual of the Deferred Credit for the adjustment of Credits in Minimum Wage Multiples, the financial income accrued in capitalizable lease operations, the amortization of commissions charged for the initial granting of the Credit, the exchange gain, and the result from the adjustment of UDIS (creditor balance). Likewise, interest expenses shall be grouped as the amortization of costs and expenses associated with the initial granting of the Credit, as well as the exchange loss and the result from the adjustment of UDIS (debtor balance).

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

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

(35) The amortization of the Deferred Credit generated by the purchase option at a reduced price, the purchase option when adopted at maturity, as well as the income from the participation in the sale of goods in capitalizable lease to a third party, shall be presented in the line of other income (expenses) of the operation.

(36) For the case of loans granted to officials and employees, the interest derived from them shall be presented in the statement of results in the line 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, as with active employees, the collection of said loan is carried out directly, in which case they shall be recorded in accordance with 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, in accordance with what is established in this criterion.

Real Estate (B-6)

Objective and Scope

(1) This section aims to define the specific criteria regarding the recognition, valuation, presentation, and disclosure in 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:

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;

Appraisals of the real estate assets of Institutions and Mutual Societies must be conducted annually. The aforementioned term shall be computed from the date of the last appraisal performed. 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 asset, 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 they acquire, build, or administer must be 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 real estate appraisal must insert at the bottom of their consolidated General 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 real estate appraisal".

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

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

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

Presentation Standards

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

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

The increase from the update of the Real Estate line acquired in financial lease shall be reflected within that same line, and

The increase from the update of the depreciation lines of real estate of regular products, and real estate acquired in financial lease shall be reflected within their corresponding line.

(4) Regarding the registration of real estate under construction reflected in the "Real Estate under Construction" line, 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 "Real Estate" line, subjecting the latter to the update process in accordance with the established guidelines.

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 if applicable, within the shorter term agreed in the terms of article 40 of the Law on the Insurance Contract, must be cancelled accounting-wise within a maximum of 15 calendar days following the end of the corresponding term.

(2) Likewise, within a period of 15 calendar days, they must effect the cancellation of reinsurance operations ceded that the issuance of the corresponding policy has given rise to.

Debts Owed by Departments and Entities of the Federal Public Administration

(3) Insurance Institutions shall register in the line 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

natural days following the date of its maturity and that are backed by a national public bid managed by the Dependencies and Entities of the Federal Public Administration or Federal Entities, which have entered into, for the purposes of the bid, an agreement with the Federal Executive and that, in accordance with what is established in the Law of Acquisitions, Leases and Services of the Public Sector and the Federal Budget and Fiscal Responsibility Law, are supported by the Federal Expenditure Budget for the Fiscal Year that corresponds.

(4) Insurance Institutions must separately register the premium subsidy in accordance with the Agreement that the Ministry of Finance and Public Credit issues annually regarding the Rules of Operation of the Programs for the Premium Subsidy for Agricultural Insurance and Support for Agricultural Insurance Funds.

(5) In the case of liability insurance that by legal provision has the character of mandatory, they cannot cease in their effects, be rescinded, or be deemed terminated prior to the date of termination of their validity, in accordance with 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 will not produce the cessation or suspension of its effects. Nor will 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 bonds, the total or partial non-payment of the premium will not produce the cessation or suspension of its effects and only the return of the bond to the Institution that issued it will allow its cancellation in accordance with what is provided in the last paragraph of Article 166 of the LISF. Likewise, the registration of cancellation for expiration may be carried out in accordance with what is stated in Article 174 of the LISF.

(8) For the above reason, mandatory liability insurance, surety insurance, and surety bonds cannot be cancelled for non-payment.

Fees and Surcharges on Policies

(9) The fees on policies derived from the expenses for the issuance of the policy, its modifications or reforms, which are part of the premium receivables item, must be registered by operation and line of business in the Fees or Policy Products line item, which is part of the operating cost, at the moment that the premiums are registered, in order to recognize the income for this concept in the same period, regardless of the date on which they are carried out.

(10) In the case of surcharges on premiums, which is also part of the premium receivables item, they must be registered against the liability account, surcharges on premiums to accrue and subsequently, their allocation to results must be carried out in accordance with the accrual determined monthly, in the item of surcharges on premiums which is part of the comprehensive result of financing.

Receivables from Surety Liabilities

(11) Institutions that operate Sureties must register in their accounting all the operations they carry out, regardless of their origin, among which stands out the registration of receivables from surety liabilities, which in accordance with 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 that they may have obtained at the time, this Chapter establishes the provisions to which Institutions operating Sureties must be subject for the registration of collection rights for the payment of sureties;

For the amount paid of the claims that Institutions operating Sureties make with their own resources, and there are 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 must be registered in their asset, according to the percentages established in the attached table of this criterion, removing the charge to results previously made, this regardless of its 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 will be carried out in the creditor results item that corresponds.

The collection right that is registered must not be higher than the amount paid and cannot 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 sureties claimed and paid must be registered directly to results, as well as the income obtained on them at the time;

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

The registration of collection rights will remain registered in the asset for a period of four years, counted from the date of payment, taking into account the quality of the guarantee, temporality and percentages indicated in the table attached to this criterion. To this effect, the collection right must be cancelled once the said period has concluded and carried to the item of uncollectible accounts, as it is cancelled.

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

In those sureties claimed and paid that have re-surety, whether taken or ceded with Institutions operating Sureties, Insurance Institutions or Institutions from Abroad, the corresponding part will be registered in the specific items for these operations, in accordance with the minimum catalog referred to in Criterion C-1 of this Annex, applying in what is pertinent the Provisions of this Chapter. For this effect, the Ceding Institution must inform within a period that will not exceed 20 business days, counted from the date of accounting, to those institutions to which they ceded in re-surety;

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

Percentages for the Recognition of Collection Rights (Receivables from Surety Liability)

TYPE OF GUARANTEE

PERMANENCE IN THE ASSET

1st year

2nd year

3rd year

4th year

Pledge consisting of cash or values issued or guaranteed by the Federal Government or issued by the Bank of Mexico.

100

Risk coverage for compliance that devolution institutions of development banking grant directly or through a trust.

100

Pledge consisting of qualified values issued by credit institutions or values subject to investment in accordance with articles 131 and 156 of the LISF with a rating of "Good" or "Adequate".

Pledge consisting of qualified values issued by credit institutions or values subject to investment in accordance with articles 131 and 156 of the LISF with a rating lower than "Adequate".

Pledge consisting of money deposits in credit institutions.

100

Pledge consisting of loans and credits in credit institutions.

100

Letter of guarantee or contingent credit from
Credit Institutions.

100

"Stand By" Letter of Credit or Letter of credit of guarantee or contingency from Qualified Foreign Credit Institutions with a rating of "Good" or "Adequate".

100

"Stand By" Letter of Credit or Letter of credit of guarantee or contingency from Foreign Credit Institutions with a rating lower than "Adequate".

"Stand By" Letter of Credit notified or Letter of guarantee or contingency credit notified from Foreign Credit Institutions with a rating of "Superior" or "Excellent".

"Stand By" Letter of Credit notified or Letter of guarantee or contingency credit notified from Foreign Credit Institutions with a rating of "Good" or "Adequate".

Counter-guarantee from Institutions, from Institutions from Abroad that are registered in the RGRE with a rating of "Good" or "Adequate", or of persons who comply with what is established in the
article 188 of the LISF.

100

Account Management.

100

Trusts of guarantee on values that comply with what is provided in articles 131 and 156 of the LISF.

Mortgage.

Encumbrance in Guarantee

Trusts of guarantee on real estate.

Indemnity Contract from a foreign company with a rating of "Superior", "Excellent" or "Good".

Indemnity Contract from a foreign company with a rating of "Adequate".

Solidary obligation in favor of the Institution, of a Mexican or foreign company with a rating of "Adequate".

Trusts of guarantee on values other than those provided in articles 131 and 156 of the LISF.

Pledge consisting of values other than those provided in articles 131 and 156 of the LISF.

Trusts of guarantee on movable property.

Pledge consisting of movable property.

Proven solvency.

Ratification of signatures

Signature of solidary obligor natural person with a verified patrimonial relationship.

Pledge of book credits.

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

Agents Current Account

(13) In the concept of Agents, Current Account, operations on behalf of or in favor of natural or legal persons who intervene in the contracting or advice of insurance or surety contracts are registered, in accordance with what is provided in articles 91, 101 of the LISF, without including premiums pending collection in the hands of Agents.

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

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

Adjusters, Current Account

(16) The amount of operations on behalf of or in favor of natural or legal persons who intervene in the adjustment of claims, in accordance with what is provided by article 109 of the LISF, must be registered in the corresponding debtor item.

(17) At the end of each month it will only present 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 the figures relative to each new period, the previous movement must be cancelled and at the same time, if applicable, the amount of the newly determined net creditor balances will be registered.

Receivables (B-8)

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

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

Such estimation must be obtained by carrying out a study that serves as a basis to determine the different future quantifiable events that could affect the amount of those receivables, thereby showing the estimated recovery value of the enforceable rights;

The estimation of receivables that are not included in the previous paragraphs must be constituted by the total amount of the debt according to the following terms:

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.

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

balances in favor of taxes;

ii.

creditable value added tax;

iii.

liquidating accounts;

iv.

security deposits;

dividends receivable on shares, and

vi.

receivables for interest on deposits received as security for sureties.

The concepts resulting from operations between parent and branches will be subject to the following:

The movements referred to operations between parent and branches must be matched at the close of the 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 present net debtor balances, so the amount of net creditor balances must be transferred to the liability account. With the purpose of recognizing the figures relative to each new period, the previous movement must be cancelled and at the same time, if applicable, the amount of the newly determined net creditor balances will be registered;

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 those cases that so require.

Reinsurers and Retro-ceders (B-9)

Objective and Scope

(1) This section establishes the accounting criteria that Institutions and Mutual Societies must be subject to in reinsurance and retrocession operations that they carry out, in accordance with contracts, addendums or any other document related, for which assets and liabilities must be registered and results affected derived from said operations.

Criteria applicable in matters of reinsurance or retrocession.

Asset

Insurance and Surety Institutions

Insurance Institutions, Current Account (asset-liability)

(2) All items arising from reinsurance operations and carried out with institutions from the country and abroad must be registered in the item of Insurance and Surety Institutions, at the end of each month it will only present 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 the figures relative to each new period, the previous movement of the transfer of the liability must be cancelled and at the same time, if applicable, the amount of net creditor balances newly determined in said item will be registered.

Commissions Receivable/Payable for Reinsurance and Retrocession Taken/Ceded (asset-liability)

(3) Institutions and Mutual Societies that have ceded reinsurance or retrocession will register the amount of the commission receivable corresponding to the premium that they have retained for the concept of Reserve for Risks in Course or Sureties in Force, which they have carried out 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; said commission will be due upon the release of the corresponding reserve. In reinsurance or retrocession operations taken, Accepting Institutions will register the amount of commissions payable relative to the premiums that have been retained for the concept of Reserve for Risks in Course, said 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 present net creditor balances. With the purpose of recognizing the figures relative to each new period, the previous movement must be cancelled and at the same time, if applicable, the amount of net creditor balances newly determined will be registered.

Retained Deposits:

Premiums Retained for Reinsurance and Retrocession Taken

(5) In this item, the amount of reserves for premiums that have been retained by the ceding institutions will be registered, as well as premiums retained by institutions from abroad in retrocession taken operations.

Claims Retained for Reinsurance Taken

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

Participation of Institutions or Foreign Reinsurers for Risks in Course

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

(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 they report the cession of risks to Insurance Institutions and/or foreign reinsurers registered in the General Register of Foreign Reinsurers to take reinsurance and retrocession from the country, must constitute in the recoverable amount of reinsurance for Risks in Course in accordance with the cession percentages established by the 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 Claims Occurred and Not Reported and Adjustment 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 but not limiting to items of the same nature.

Participation of Reinsurers for Salvages Pending Sale for Reinsurance Taken and Ceded (asset-liability)

(12) In this concept, the amount of salvages pending sale on the date of the balance sheet or valuation (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, for Reinsurance Taken

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

Participation of Retro-ceders for Paid Claims

(14) In this item, the amount of paid claims corresponding to the participation of country and foreign retro-ceding institutions for retrocession ceded and retroceded 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 Retro-ceding Institutions in Constituted Liabilities

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

Participation of Reinsurers for Non-Proportional Reinsurance and Retrocession 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 retrocession contracts celebrated, will be registered.

Reinsurance and Retrocession Intermediaries (liability)

(17) Items derived from brokerage operations in favor of intermediaries authorized by the Commission, in accordance with what is provided by 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 that corresponds 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.

Estimation for Write-offs of Reinsurance or Retrocession Operations

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

Insurance Institutions current account

Surety Institutions, current account

Premiums retained for reinsurance and retrocession taken

Claims retained for reinsurance taken

Participation of reinsurers for salvages pending sale for reinsurance taken

Participation of retro-ceding institutions for paid claims

Participation of retro-ceding institutions in constituted liabilities

Participation of reinsurers for non-proportional reinsurance and retrocession coverage

Reinsurance and Surety Intermediaries

10)

Others related to receivables generated against reinsurers or surety providers.

(20) Institutions and Mutual Societies must perform, at least once a year, a detailed analysis of each and every item comprising the aforementioned categories, for the purposes of determining and accounting for estimates for write-offs of reinsurance or surety operations. They must consider, without limitation, the following aspects:

The supporting documentation that verifies the items comprising the balances related to facultative business, as well as confirmations from reinsurers regarding the quarterly balances reported in the statements of account for Automatic Reinsurance Contracts and surety contracts;

The age of the items comprising the balance of the aforementioned reinsurance or surety accounts;

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

The balances in litigation against reinsurers;

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

That foreign reinsurers are registered in the General Register of Foreign Reinsurers to take reinsurance and surety from the country.

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

(22) For the above reason, the minimum criteria that Institutions, Mutual Societies, and external auditors will apply to determine the recording and review of estimates for write-offs of reinsurance or surety operations, in accordance with what is provided by Article 33 of the Commercial Code, by Bulletin C-3 "Accounts Receivable" part of the Financial Information Standards, and by Chapter 22.2 of these Provisions regarding the main and auxiliary books and records, will be the following:

Items comprising the balances of the categories indicated in paragraph (19) items 1) to 6), in which the corresponding supporting documentation is not available, may not remain registered in the assets. Supporting documentation is understood to mean reinsurance or surety contracts, statements of account, balance confirmations, payment or collection from reinsurers or surety providers, and collection management;

To quantify the amount of the items comprising the balance of the reinsurance or surety accounts, a study must be conducted to serve as a basis for determining 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 they have gathered, the creation or increase of the corresponding estimate or, if applicable, their permanence within the assets;

Analyze the status of litigation regarding debts that reinsurers have with the 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;

The increases or reductions made to the write-off accounts for reinsurance or surety operations must affect results in the exercise in which they are made;

For balances owed by reinsurers not registered in the General Register of Foreign Reinsurers to take reinsurance and surety from the country and for reinsurers that are in commercial insolvency, bankruptcy, or liquidation status, an estimate for doubtful receivables must be established at 100%, unless the Institutions and Mutual Societies have documentation that allows them to verify the establishment of a percentage different from the one indicated, and

The possible existence of significant subsequent events must be considered as support to establish the reasonableness of the estimates, or that they 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 surety 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 referred to 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 the Institutions and Mutual Societies. Likewise, in cases where, as a result of the analysis performed, the need to make an estimate for write-offs has not been determined, the Institutions and Mutual Societies must keep available the documentation that meets the requirements established in Chapter 22.3, which verifies the performance of said analysis.

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

(26) Institutions and Mutual Societies must inform the reasons why they registered or, in their case, cancelled the items comprising the balance of the accounts for estimates for write-offs of doubtful receivables generated by reinsurance or surety operations, through disclosure notes to the financial statements at the end of the relevant exercise.

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 it in the specific categories of "Preventive Estimation of Credit Risks of Foreign Reinsurers" in assets and "Preventive Write-offs for Recoverable Amounts of Reinsurance" in results, both categories indicated in the minimum catalog referred to in Criterion C-1 of this Annex.

Liabilities

Retained Deposits

Premiums Retained for Ceded Reinsurance and Surety

(28) Institutions or Mutual Societies that have ceded or retroceded reinsurance or surety will register the amount of premiums retained by Institutions or Foreign Reinsurers that have been made 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 Retained Claims for Ceded Reinsurance

(29) Institutions or Mutual Societies that have ceded or retroceded reinsurance or surety will register the amount of reserves for retained claims by Institutions or Foreign Reinsurers that have been made 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 Providers for Guarantees Pending Recovery

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

Participation to Surety Providers for Recoveries, Payable

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

Creditors for Premiums of Non-Proportional Reinsurance and Surety Coverage

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

Presentation Standards

(33) Concepts related to reinsurers and surety providers in the terms established in this Provision must be shown in the Consolidated Balance Sheet of the Institutions, grouped in the category of reinsurers and surety providers 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, for presentation purposes.

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

Assets

Loans for 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 for Financial Reinsurance Contracts Granted, corresponds to the Write-off made 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.

Liabilities

Creditors for financial reinsurance contracts, corresponds to the payment commitment on the financing obtained through financial reinsurance operations, and

ii.

Creditors for interest on financial reinsurance contracts, refers to the accrued interest payable derived from financial reinsurance contracts.

Results

Write-offs, corresponds to the effect on results from the Write-off made 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 Providers

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

For the purpose of ceded premiums:

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

When a risk already issued is ceded.

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

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

On the valuation date of the Reserve for Occurred and Not Reported Claims and Adjusted Expenses for Occurred 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 surety operations taken, the retention of resources that cedents effect for the cession of responsibilities assumed in insurance and surety policies to Institutions, its accounting recording must be recognized in the category of Premiums Retained for Reinsurance and Surety 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 comprising the categories 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 Surety Intermediaries current account category, only the brokerage that Institutions must pay to reinsurance intermediaries will be registered and recognized under this category 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.

Advances of Commissions and Participation in Reinsurance Profits

(42) Advances of reinsurance commissions and profit participation must be recognized as a liability in the category of Insurance Institutions current account or Surety, as appropriate, for the amount of cash received in excess of the application of the reinsurance or surety 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 the 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) The premiums of non-proportional reinsurance and surety coverage of reinsurance contracts must be recognized in the liability and in the result accounts in accordance with what is stated in Bulletin C-9 "Liabilities, Provisions, Assets and Contingent Liabilities and Commitments" issued by the CINIF.

Presentation Standards

(47) Loans and interest for 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 for Financial Reinsurance Contracts.

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

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

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 in 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. Therefore, the Commission considers it convenient to have consolidated financial statements of said corporate groups, which must be formulated in accordance with the 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 the CINIF, except for the provisions and definitions indicated 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 a controlling entity must establish the necessary methodology to allow the harmonization of 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 this, they must take into account the following:

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

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, the balances corresponding to the "estimate for impairment of long-term assets" must be included within the format indicated in Criterion C-1, in the category of "Real Estate", and in results in the category of valuation of investments, the balance corresponding to the "impairment loss";

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 category of "Various" or within the category of "Other Assets", considering the nature of the asset, indicating in a separate line the description of the assets that are incorporated in the minimum catalog, which for this purpose the Institution or Mutual Society will send to the Commission;

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 surety that they have operated between them, in view of the fact that the controller will be considered as the total retainer of the obligations, and

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 category of "Various" or within the category of "Other Liabilities" considering the nature of the liability, indicating in a separate line the description of the liabilities that are incorporated in 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 that subsidiaries register, different from the operations that Institutions and Mutual Societies register, 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 indicated by 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 Accounts" and "Availability and Temporary Investments", taking into consideration that Institutions and Mutual Societies carry out specialized operations. Likewise, instead of using the category of "Changes", within equity, the category of "Accumulated Effect from Conversion" must be included in a separate line item.

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 categories that the minimum catalog referred to in Criterion C-1 of this Annex contemplates for this purpose.

(4) Likewise, in accordance with what is 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 categories that, in accordance with the minimum catalog, are

...

establish and in results at the equivalent in national currency at the close of each month.

Risk Reserve for In-Progress Operations

(6) For the Risk Reserve for In-Progress Operations of life, accident and health, and property operations, Institutions shall register in the item "Risk Reserve for In-Progress Operations (Valuation at Agreed Technical Rate)" the result of the valuation of said reserve, for those policies in force in the valuation month (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 the referred month (t). The registration of the aforementioned reserve shall be applied against results in the item "Net Increase to the Risk Reserve for In-Progress Operations." Likewise, in the assets, the recoverable reinsurance amounts shall be registered in the item "Participation of Institutions or Foreign Reinsurers for In-Progress Risks (Valuation at Agreed Technical Rate)" and the estimate for default which shall affect results in the concept of preventive write-downs for recoverable reinsurance amounts, established in the minimum catalog referenced in Criterion C-1 of this Annex.

(7) In the month-by-month valuation of the Risk Reserve for In-Progress Operations of long-term insurance, variations that arise 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 shall be determined. These variations shall be registered in the item named "Result in the Valuation of the Long-Term Risk Reserve for In-Progress Operations due to Interest Rate Variations." Additionally, the corresponding effects on Recoverable Reinsurance Amounts shall be registered in the Asset item named "For Participation of Institutions or Foreign Reinsurers for In-Progress Risks (Variation at Agreed Technical Rate)."

The "Result in the Valuation of the Long-Term Risk Reserve for In-Progress Operations due to Interest Rate Variations" shall be determined solely by the change in the interest rates employed; therefore, in the first valuation of the Risk Reserve for In-Progress Operations of long-term insurance in accordance with these Provisions, a valuation shall be performed that identifies the amount originating from the change in the interest rate employed, as well as the amounts originating from changes in the calculation methodology and demographic assumptions. For these purposes, Institutions shall perform a valuation using the valuation method registered with the Commission in accordance with these Provisions, employing the technical interest rate with which the reserve was being valued prior to the entry into force of these Provisions ("Agreed Technical Rate"), and compare said amount with the valuation of the reserve applying the corresponding market risk-free rate curve in accordance with these Provisions, understanding that the difference between the amounts obtained with the aforementioned valuations is the effect produced solely by the change in the interest rates employed.

(8) The sum of the item "Risk Reserve for In-Progress Operations (Valuation at Agreed Technical Rate)" and the item "Result in the Valuation of the Long-Term Risk Reserve for In-Progress Operations due to Interest Rate Variations" shall be the value presented in the general item "Risk Reserve for In-Progress Operations," 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 risk-free market interest rate or rates corresponding to the valuation month (t+n) in question.

(9) Similarly, in congruence with the calculation of the Risk Reserve for In-Progress Operations, the corresponding recoverable reinsurance amounts shall be determined, using the items of the minimum catalog established for such effect in this Annex.

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

(11) The variations that arise in the value of the Risk Reserve for In-Progress Operations and in the Long-Term Recoverable Reinsurance Amounts due to differences in the interest rates employed in their valuation, shall correspond to unrealized losses or gains, which could be reversed subsequently depending on the movements of the rates employed for valuation; therefore, their registration shall affect equity capital in the item "Surplus / Deficit due to Valuation of the Long-Term Risk Reserve for In-Progress Operations."

(12) Likewise, the deferred tax that, if applicable, is generated from the registration of the variations due to the valuation of the Long-Term Risk Reserve for In-Progress Operations in the item "Deferred Income Tax on the Long-Term Risk Reserve for In-Progress Operations" shall be considered.

Reserves for Pending Obligations to be Fulfilled

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

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

(14) Their registration shall 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 referenced in Criterion C-1 of this Annex.

Surety Reserve in Force

(15) For the Surety Reserve in Force, the total corresponding liability shall be registered against results in the concept of net increase of the Surety Reserve in Force, and in the assets, the recoverable retrocession amounts and the estimate for default, which shall affect results in the concept of preventive write-downs for recoverable retrocession amounts, established in the minimum catalog referenced in Criterion C-1 of this Annex.

Contingency Reserve for Sureties

(16) The liability determined in accordance with the respective calculation bases shall be registered against its results, in accordance with the minimum catalog. This contingency reserve for sureties is cumulative and may only cease to increase when so determined by the Commission.

Presentation

(17) In accordance with the formats of the financial statements established in Series III. Criteria relating to the basic consolidated financial statements of the CUSF, the amounts of the technical reserves that Institutions and Mutual Societies register shall 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 registration 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 shall perform 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 constitution of reserve;

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 referenced in Criterion C-1 of this Annex, and

2)
Cancellation of Reserves.

i.
Number of journal voucher for cancellation of reserve;

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 referenced in Criterion C-1 of this Annex.

(19) The journal vouchers with all the indicated data shall 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, shall 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 claims 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 globalizing journal voucher.

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

(21) This section aims to establish uniform criteria for the accounting registration 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 granted directly by the Insurance Institution and which by their nature originate the constitution or increase of risk reserves for in-progress operations, these shall be registered from the moment the obligation to grant the corresponding benefits arises, and said registration shall be charged against results in an item named "Net Increase of the Risk Reserve for In-Progress Operations," sub-items "For Additional Benefits of Direct Insurance," or, "For Additional Benefits of Taken Reinsurance" as applicable, indicated in the minimum catalog referenced in Criterion C-1 of this Annex.

(23) The Insurance Institution shall register at the moment the payment obligation for additional benefits arises, the reserve for pending obligations to be fulfilled for occurred claims, charged against results in the item of claim experience and other contractual obligations, in the sub-items named "Claims for Additional Benefits of Direct Insurance," "For Pensions" and in the sub-item "Claims for Additional Benefits of Taken Reinsurance," "For Pensions," indicated in the minimum catalog referenced in Criterion C-1 of this Annex.

Premiums in Deposit

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

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

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

(1) In off-balance sheet accounts, Institutions shall 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 shall be grouped at minimum as follows 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 upon which the institution has placed a seizure and which 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.- Shall register the amount that the insurer administers for these concepts; independently of these records, they shall perform the necessary ones to control this type of operations, by contractor and class of investment;

ii.
Funds in Administration.- Amount that the insurer administers for these concepts; independently of these records, they shall perform 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, keeping an individual record for each contract entered into;

iv.
Trusts.- Amounts that the insurer or surety company receives for these concepts to administer, shall additionally establish a special accounting for each contract they enter into, in which they shall register the money and other assets, values, and rights entrusted to them, as well as the increases and decreases, due to the respective products or expenses, invariably coinciding the balances of the controlled accounts with those of the special accountings, and

Losses borne by the entity due to responsibilities incurred as a fiduciary, shall 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 shall be made based on accrual. The accumulation of said accrued income shall be suspended at the moment when the debt for these presents 90 or more natural days of non-payment, being able to accumulate again when the pending payment debt is liquidated in its entirety.

While the accrued income from the management of trusts is suspended from accumulation and is not collected, the control thereof shall be carried out in off-balance sheet accounts. In case said accrued income is collected, it shall 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 for commissions received by insurers or surety companies, and its balance shall be cumulative, to 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.

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

ii.
Participation to Retrocessionors of Recovery Guarantees. Guarantees granted by the sureties and joint obligors for the operations of retrocession ceded and retroceded to other institutions. They shall keep control of the sureties 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 the maximum limit for their registration the amount of the surety policy. Cancellation movements shall proceed when the claim is paid, qualified as improper, or there is withdrawal. In case there is litigation in the claim, the registration shall remain in this account, and

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

6)
Group: Contingent Claims

i.
Contingent Claims.- Refer to the registration of received claims that have been presented to the surety company and which has knowledge and verification that there is some litigation between the surety and beneficiary in order to determine the exigibility of the policies, without that until that moment the surety company forms part of the litigation. Likewise, it corresponds to the registration of those claims in which the surety company 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 proper integration.

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

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

ii.
Participation of Contingent Claims.- Amount of participations corresponding to other institutions for contingent claims of surety policies in which ceded and retroceded retrocession has operated. They shall 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 that until that moment the surety company is a 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. They shall 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 because they have been determined as improper, and

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

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 retrocessionors for the recoveries made in the exercise derived from ceded and retroceded retrocession. They shall 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. In order to recognize the figures relative to each new period, the initial balance of this item shall be cancelled at the end of each exercise and, at the same time, if applicable, the excess determined again shall be registered.

12)
Group: Capital Registration Accounts

i.
Updated Contribution Capital.- Capital contributions made by partners or shareholders and their update, and shall be decreased with capital reductions made, 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 shall be carried out based on the respective authorizations granted by the National Insurance and Surety Commission.

13)
Group: Registration Accounts. Fiscal Registration

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

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

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

iv.
Fiscal Result.- Amount resulting from the combination between the income

accumulable items, deductible items, non-accumulable items and non-deductible items, and

Net fiscal profit for distribution.- It corresponds to the net fiscal profit of each fiscal year, as well as the dividends received by the institution from other commercial companies resident in Mexico, and is decreased by the amount of dividends or profits that are distributed in cash or in kind, originating from previously registered profits, under the terms established by the Income Tax Law and for the purposes of the withholding taxes on said tax established in that Law.

14)

Group: Recording Accounts. Various

Uncollectible accounts.- Amount of Uncollectible Credits that have been written off by the institution, maintaining control by lines of business in those cases where appropriate;

ii.

Participation of uncollectible accounts by retrocession.- Amount of the participation of surety bonds paid that have been declared uncollectible due to ceded and retroceded retrocession. There must be control over operations for ceded retrocession of direct and ceded retrocession of assumed;

iii.

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

iv.

Depositories of surety bonds to be issued.- Amount of the surety bond provisions that the surety institution makes to its agents, based on the amount of the coverage of the bonds or by the amount of the current operating margin;

Sanctions to pay.- represent the fines imposed by the National Insurance and Surety Commission, pending payment, including those sanctions that are in the process of resolution by this Commission, or before other authorities, and

vi.

Unspecified diverse concepts.- All those concepts and operations that do not specifically appear in other off-balance sheet accounts, establishing the relevant classifications for adequate analysis, through the respective sub-accounts.

15)

Group: Derivative Products Operations

Acquisition of option contracts.- Notional amount of option contracts;

ii.

Rights and obligations for forward operations.- Notional amount of forward operations;

iii.

Acquisition of swaps.- Notional amount of Swap Operations, and

iv.

Acquisition of forwards.- Notional amount of Forward Operations.

16)

Group: Securities Operations Granted on Loan

Assets to be received as collateral for loan.- Amount of assets or securities delivered as collateral for the securities lending operation.

17)

Group: Guarantees Received for Derivatives

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

18)

Group: Guarantees Received for Repo

Guarantees received for repo.- Quotation cost of the securities that are under collateral for repo.

ii.

Accrued uncollected interest derived from overdue credit portfolio.- Corresponds to the control of accrued interest from the Overdue Credit 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 recording of premiums for insurance and surety contracts.

Accounting Registration

(2) Insurance Institutions and Mutual Societies must register in the item that integrates premiums issued by operation and line of business, insurance contracts at the time of their subscription for the total premium of the operation, which will be determined by the previously defined payments, or in the case of insurance where the insured sum is periodically modified due to its characteristics, the registration of the premium must be in accordance with that period, against the item of debtors for insurance premiums and in the case of premiums for assumed reinsurance, these will be registered 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 of business, 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 start date of the policy to which such premium corresponds, in accordance with what is established in Provision 5.2.3. of this Circular.

(4) Registered issued premiums in results are integrated at minimum by 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 accident and health and damage operations, and

Premiums of direct insurance by subsidy.- Correspond to premiums that the Federal Government grants by subsidy to support 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 a consequence of a rectification of the social security institutes, IMSS and/or ISSSTE.

From Assumed:

First year premiums of assumed reinsurance.- Correspond to first year premiums for assumed reinsurance, of the life operation;

ii.

Renewal premiums of assumed reinsurance.- Correspond to renewal premiums for assumed reinsurance, of the life operation;

iii.

Single premiums of assumed reinsurance.- Correspond to single payment premiums for assumed 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 assumed reinsurance.- Correspond to premiums for assumed reinsurance, of accident and health and damage operations.

Less:

Returned single premiums of assumed reinsurance.- Correspond to the return of premiums of the assumed 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 Registration

(5) Insurance Institutions and Mutual Societies must register in results by operation and line of business in the item that integrates ceded premiums, at the time of the issuance of the insurance contracts, in the percentages agreed in the reinsurance contracts, in the case of ceded premiums of the assumed, the registration will be made the month following the issuance of the contracts, in accordance with the information provided by the cedent, against the item of insurance institutions.

(6) The registration of the premiums of reinsurance and retrocession operations relative to proportional contracts and facultative business in any of their forms of placement, must be considered as "ceded premiums" and registered in the corresponding items.

(7) Ceded premiums in results are integrated at minimum by 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, 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 accident and health and damage operations.

Ceded from Assumed

First year retroceded premiums.- Correspond to assumed reinsurance premiums, retroceded in reinsurance, relative to the life operation;

ii.

Renewal retroceded premiums.- Result from the renewal of assumed reinsurance premiums, retroceded in reinsurance, relative to the life operation;

iii.

Single retroceded premiums.- Are single payment premiums of assumed 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 assumed reinsurance, retroceded in reinsurance, relative to accident and health and damage operations.

Surety Premiums

Accounting Registration

(8) Institutions must register in results in the item that integrates sureties issued for surety bonds, by line and sub-line, at the time of the subscription of the surety contract against the item of premiums to be collected for issued surety bonds and in the case of assumed retrocession, these will be registered in results in the month following their issuance in accordance with the information provided by the cedent, against the item of surety institutions.

(9) Surety premiums in results are integrated at minimum by the following concepts, according to the lines or sub-lines practiced by Institutions:

Premiums of Direct

Direct surety premiums.- Correspond to premiums for subscription of direct surety bonds of the surety operation.

Less:

ii.

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

Premiums of Assumed

Premiums of assumed retrocession.- Correspond to premiums for surety bonds from assumed retrocession.

Less:

ii.

Returned premiums by assumed surety.- Are surety premiums returned by institutions.

Ceded Surety Premiums

(10) Institutions must register in results by line and sub-line in the item that integrates ceded premiums, at the time of the subscription of the surety contract and in the case of retroceded premiums in retrocession, in the month following the issuance of the contracts, in accordance with the information provided by the cedent, against the item of surety institutions.

(11) Ceded premiums in results are integrated at minimum by the following concepts, according to the operations carried out by Institutions:

Ceded from Direct

Premiums ceded in retrocession.- Correspond to premiums ceded to retrocessionaires from the country and abroad by retrocession.

Less:

ii.

Returned premiums by ceded retrocession.- Correspond to premiums for surety bonds returned in retrocession.

Ceded from Assumed

Premiums retroceded in retrocession.- Correspond to premiums of assumed retrocession retroceded in retrocession.

Less:

ii.

Returned premiums by retroceded retrocession.- Correspond to premiums for surety bonds returned from the assumed by retroceded retrocession.

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 insurance and surety contracts, as well as commissions for ceded reinsurance and retrocession and other concepts, in accordance with 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 Registration

Acquisition Cost

(2) When it comes to commissions that Institutions grant for the placement of insurance and surety contracts under the terms of articles 101 and 102 of the LISF, regardless of their 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 related 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 minimum catalog.

(3) Commissions on premiums and the participation in profits of assumed reinsurance and retrocession, must be registered in results in the month in which the information is received, against the corresponding liability in Insurance Institutions, Current Account, understanding that commissions on premiums and the participation in profits of reinsurance and retrocession, 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 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 fiscal year to which their granting corresponds.

(5) The application of commissions in favor of insurance and surety policyholders, will affect their results at the time of the 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 premium reduction that corresponds to the total or partial application of said commissions.

(6) In relation to the cost of non-proportional reinsurance and retrocession 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, independent of the payments agreed for the concept of minimum premium and deposit, recognition that must be reflected against the liability related to Insurance Institutions, Current Account. Likewise, in the case that at the end of the coverage period, according to issued premiums, claims and other factors, an adjustment in the cost of the coverage to be borne by 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 fiscal year to which the indicated adjustment corresponds.

(7) Likewise, when non-proportional contracts are celebrated that consider in their coverage more than one line of business, the costs associated with each of the protected lines of business must be identified, in order to reflect the specific costs of each of them, precisely in the accounting registration.

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

(9) Accounting registration of additional benefits of pension insurance derived from Social Security Laws.- When the Insurance Institution grants additional benefits to basic pensions based on contracts celebrated with other Insurance Institutions, it must register 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 registered 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 Insurance Institution on the date when the validity of said benefits begins.

(10) In no case can the application of costs or expenses of the additional benefits referred to in these criteria be deferred to the results of subsequent fiscal years.

(11) The concept of other acquisition expenses will refer to all other expenditures for the administration, development, promotion and placement of insurance and surety contracts, which must be registered in results at the moment they are made. Likewise, payments and compensations to legal persons for services other than those that the LISF reserves for 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 of payment.

Recovery of Acquisition Cost

(12) Commissions that are recovered for the concept of ceded premiums in reinsurance and/or retrocession, will be registered 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 minimum catalog.

(13) Commissions on assumed reinsurance and retroceded retrocession premiums, must be registered in results in the month in which the information is received, against the corresponding asset to Insurance Institutions, Current Account.

(14) In reinsurance and retrocession contracts in which the payment of the participation in reinsurance and retrocession profits has been agreed, in its case, such participation must be provisioned monthly against results, provision that must be adjusted quarterly in accordance with the results obtained and the conditions agreed in the reinsurance contracts.

(15) In retroceded reinsurance and retrocession contracts, of the assumed in which the payment of the participation in reinsurance and retrocession profits has been agreed, they must be registered in the months in which the information is received, in accordance with the results obtained and the conditions agreed in the reinsurance contracts, against the corresponding asset 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 claims, due to risks and responsibilities they assume for the issuance of insurance and surety contracts, in accordance with what is established in articles 216, 217, 218, 219, 221, 224, 296, 297, 298, 299, 300, 301 and 303 of the LISF.

Accounting Registration

(17) Institutions and Mutual Societies, in accordance with what is established in articles 301 and 303 of the LISF, must register the claims, maturities and received claims, as well as the recoveries that they maintain for reinsurance and retrocession contracts, directly in results in the item of net claim cost, claims and other contractual obligations in the following sub-items that are indicated at minimum below against the liability and asset that for such effect are established in the minimum catalog to which Criterion C-1 of this Annex refers.

Net Claim Cost, Claims and Other Contractual Obligations

Claims and Other Contractual Obligations

From Direct Insurance

(18) The claim cost 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 refer to the increases that according to actuarial procedures is determined, in accordance with what is stated in article 342 fraction XII of the LISF;

The adjustment to the reserve for pending obligations to fulfill for occurred and unreported claims, which corresponds to the gradual increase of the original reserve and the adjustment of the exercise in accordance with the estimation of occurred and unreported claims, in accordance with what is stated in article 217, fraction II, subsection c) of the LISF;

The adjustment to the reserve for adjustment expenses assigned to occurred and unreported claims, 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 claim, in accordance with what is stated in article 217, fraction II, subsection c) of the LISF;

Claims of direct insurance, correspond to direct insurance claims occurred and reported during the year, in the case of life operations only death claims will be registered excluding additional benefits, likewise, this concept will include services for surety guaranteed by those premium payments of surety bonds when this benefit is expressly contracted in favor of insureds who require it at their opportunity, and the bonuses and the overdue payments of pensions, as well as the quotas and contributions to the individual account of the retirement insurance of the operations of pension insurance derived from social security laws;

Claims for additional benefits of direct insurance, will refer to claims occurred for additional benefits in life operation;

Annuities of direct insurance, correspond to annuities of direct insurance, payable at determined term or by life annuities 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 refer to endowments and flexible insurance of direct insurance, matured during the year, of the life operation, in which the operations of pension insurance derived from social security laws are not included;

Surrenders of direct insurance, correspond to amounts paid to insureds for the concept of surrender, for cancellation of loans by policy lapse, encumbered, of direct insurance, as well as for flexible insurance and private pensions, in which the operations of pension insurance derived from social security laws are not included;

Adjustment expenses of direct insurance claims. - correspond to all expenditures paid for expenses made of direct insurance, derived from claim adjustments, as well as for expenses made in valuation centers;

10)

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

salvages of direct insurance in favor of reinsurers, and

11)

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

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

direct insurance, correspond to the return of reserves to IMSS or ISSSTE

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

the Law of the Institute of Social Security and Services for State Workers that terminate

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

From the Insured Insurance

(19) The cost of loss experience and maturities of taken insurance shall be recorded in results

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

Institutions, Current Account and shall be integrated by the following concepts:

The adjustment to the reserve for obligations pending to fulfill for losses 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 the losses occurred and not

reported by 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 the losses 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 the adjustment expenses assigned to the loss

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

of the

LISF;

The losses of reinsurance and claims of retrocession by reinsurance and

taken retrocession, refers to

the losses of the taken reinsurance occurred during

the year. In life operations only the losses for death shall be recorded without including

additional benefits; as well as the castigated claims, both paid and for which

a liability was constituted;

The losses for additional benefits by taken reinsurance, will refer to

losses occurred for additional benefits in life operation;

The annuities of the taken reinsurance, correspond to the annuities of the taken reinsurance,

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

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

the social security laws are not included;

The maturities of the taken reinsurance, will refer to endowments and flexible insurances of the

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

pension insurances derived from the social security laws are not included;

The surrenders of the taken reinsurance, correspond to the amounts paid to the

insureds for the concept of surrender, for cancellation of loans for lapse of policies,

encumbered, of the taken reinsurance, as well as for flexible insurances and private pensions of the

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

pension insurances derived from the social security laws are not included;

The adjustment expenses of losses of the taken reinsurance. - correspond to all

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

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

taken;

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

salvages of the taken reinsurance in favor of reinsurer institutions, and

10)

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

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

taken reinsurance, correspond to the return of reserves to IMSS or ISSSTE

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

the Law of the Institute of Social Security and Services for State Workers that terminate

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

taken reinsurance.

Recovery of losses, maturities and claims

By ceded reinsurance

(20) The recovery of the cost of loss experience and maturities by ceded reinsurance will be

integrated by the following concepts:

The losses recovered by ceded reinsurance, correspond to the losses

recovered by ceded reinsurance, of the direct insurance;

The losses for additional benefits recovered by ceded reinsurance,

correspond to losses for additional benefits recovered by ceded reinsurance, of the

direct insurance. For pensions the registration will be made in accordance with the provisions

administrative provisions applicable;

The life annuities recovered by ceded reinsurance, represent the amounts

recoverable of life annuities by ceded reinsurance, of the direct insurance;

The matured endowments recovered by ceded reinsurance, represent the amounts

recoverable of matured endowments by ceded reinsurance, of the direct insurance;

The surrenders recovered by ceded reinsurance, represent the amounts recoverable of

surrenders by ceded reinsurance, of the direct insurance;

The adjustment expenses of losses recovered by ceded reinsurance, represent the

recoverable amounts for adjustment expenses of losses, by ceded reinsurance, of the direct

insurance, and

The salvages of the direct insurance, represent the amount of the salvages obtained

from the direct insurance.

By taken reinsurance

(21) The recovery of the cost of loss experience and maturities by taken reinsurance will be

integrated by the following concepts:

The losses recovered by retroceded reinsurance, correspond to the losses

recovered by retroceded reinsurance, of the taken reinsurance;

The losses for additional benefits recovered by retroceded reinsurance,

correspond to the losses for additional benefits recovered by retroceded reinsurance,

of the taken reinsurance;

The life annuities recovered by reinsurance, represent the recoverable amounts

by retroceded reinsurance of the taken reinsurance;

The matured endowments recovered by retroceded reinsurance, represent the amounts

recoverable of matured endowments by retroceded reinsurance, of the taken reinsurance;

The surrenders recovered by retroceded reinsurance, represent the amounts

recoverable of surrenders by retroceded reinsurance, of the taken reinsurance;

The adjustment expenses of losses recovered by retroceded reinsurance, represent

the recoverable amounts for adjustment expenses of losses, by retroceded reinsurance, of the

taken reinsurance;

The salvages of the taken reinsurance, represent the amounts of the salvages

obtained from the taken reinsurance;

The recoveries of losses by copayments, represent the recoverable amounts to

charge of the insureds, in the operation of accidents and illnesses in the branches of expense

medical and health, and

The recoveries of losses from third parties, represent the amounts of the

recoveries made from third parties, of the losses of the direct insurance.

Recovered Loss Experience of Non-Proportional Reinsurance

By direct insurance

(22) The recovery of the cost of loss experience and maturities by taken reinsurance, shall be

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

corresponding of Insurance Institutions, Current Account and shall be integrated by the

following concepts:

The losses recovered from non-proportional reinsurance coverage, represent the

recoverable amounts for excess loss coverage of the direct insurance for losses and

additional benefits.

By taken reinsurance

(23) The losses recovered from non-proportional reinsurance coverage by direct insurance

will be integrated by the following concepts:

The losses recovered from non-proportional reinsurance coverage by taken reinsurance,

represent the recoverable amounts for excess loss coverage of the

taken reinsurance for losses and additional benefits.

Net Cost of Claims

Claims

By direct sureties

(24) The concept of claims by direct sureties will be integrated by the following

concepts:

The claims by direct sureties, correspond to the

castigated claims,

both paid and over which a liability was constituted, in attention to the provisions

applicable, in relation to the procedure applicable to the debtors by responsibilities of

sureties;

The participation of recoveries to retrocessionaires, corresponds to the amounts

recoverable from retrocessionaires for claims paid, by direct retrocession;

The expenditures for payments of claims, by direct retrocession, refers to

the payments for claims proceeding for fiscal purposes, the amount relative to this

concept shall correspond to what is registered in the concept of recoveries to be made

on claims paid;

The paid claims guaranteed, of the ceded retrocession, represent the amounts

of the guaranteed responsibilities corresponding to the ceded retrocession,

for which the right to collect is recognized, in accordance with the applicable provisions,

in relation to the procedure applicable to the debtors by responsibilities of sureties, of the

direct retrocession, and

The provision for the payment of dividends on policies, represent the provisions for the

payment of dividends in surety operations, provided that there is authorization

of the National Commission of Insurance and Surety Bonds for such effect.

By taken retrocession

(25) The losses recovered from non-proportional reinsurance coverage by taken reinsurance,

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

corresponding of Insurance Institutions, Current Account and shall be integrated by the

following concepts:

The losses of the reinsurance and claims of retrocession by reinsurance and

taken retrocession, refers to

the losses of the taken reinsurance occurred during

the year, for castigated claims, both paid and for which a liability was constituted;

The participation of claims to retrocessionaires by taken retrocession,

corresponds to the recoverable amounts from retrocessionaires for claims paid, by

taken retrocession;

The expenditures for payments of claims, by taken retrocession, refers to

the payments for claims proceeding for fiscal purposes by taken retrocession, the

amount relative to this concept shall correspond to what is registered in the concept of

recoveries to be made on claims paid, by taken retrocession, and

The paid claims guaranteed, of the taken retrocession, represent the amounts

of the guaranteed responsibilities corresponding to the retroceded retrocession,

for which the right to collect is recognized, in accordance with the provisions

applicable, in relation to the procedure applicable to the debtors by responsibilities of

sureties, of the taken retrocession.

Recovery of claims

By ceded retrocession

(26) The concept of recovery of claims by ceded retrocession will be integrated

by the following concepts:

Participation of claims to retrocessionaires, represent the participation of

claims at charge of other institutions derived from ceded retrocession;

The recovery, corresponds to the amounts of the recoveries made of the

castigated claims in previous years, by direct sureties;

The release of the contingency reserves of sureties, corresponds to the release of the

contingency reserve in the terms stated in article 222, fraction II, in relation

to article 220 of the LISF;

The recoveries to be made on claims paid, by direct retrocession,

refers to the payments of claims proceeding, for fiscal purposes, the amount

registered in this concept shall correspond to what is registered in the concept of

expenditures for payments of claims, and

The paid claims guaranteed, by direct sureties, correspond to the

amounts of the guaranteed responsibilities corresponding to the direct sureties, for

which the right to collect is recognized, in accordance with the criteria of the present Circular,

regarding the debtors by responsibilities of sureties.

By taken retrocession

(27) The claims by taken retrocession, shall be recorded in results in the month

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

Current Account and shall be integrated by the following concepts:

The participation of claims to retrocessionaires, by taken retrocession,

represent the participation of claims at charge of other institutions derived from

taken retrocession retroceded;

The recovery, by taken retrocession, corresponds to the amounts of the

recoveries made of the claims castigated in previous years, by

taken retrocession;

The disposal of the surety reserves in force and contingency, by taken retrocession,

corresponds to the amounts disposed of the Surety Reserves in Force and

contingency, in the terms stated in article 222, fraction II, in relation to the

articles 220 and 223 of the LISF;

The recoveries to be made on claims paid, by taken retrocession,

refers to the payments of claims proceeding, for fiscal purposes, the

amount registered in this concept shall correspond to what is registered in the concept of

expenditures for payment of claims, by taken retrocession, and

The paid claims guaranteed, by taken retrocession, correspond to

the amounts of the guaranteed responsibilities corresponding to the sureties of the

taken retrocession, for which the right to collect is recognized, in accordance with the criteria

of the present Circular, regarding the debtors by responsibilities of sureties.

Recovered Claims from Non-Proportional Reinsurance and Retrocession

(28) The recovery of claims by taken retrocession, shall be recorded in

results in the month in which the information is received, against the corresponding asset of

Surety Institutions, Current Account and shall be integrated by the following concepts:

The recovery of institutions for coverage of non-proportional retrocession, by

direct surety, corresponds to the amounts of the recoveries derived from the

non-proportional retrocession contracts celebrated by the institutions, and

The recovery of institutions for coverage of non-proportional retrocession, by

taken retrocession, corresponds to the amounts of the recoveries derived from the

non-proportional retrocession contracts, by taken retrocession, 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 the losses

and claims that the Institutions and Mutual Insurance Societies register shall be

presented in the statement of results in the item of Net Cost of Loss Experience, 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 for the type of asset in question will apply.

Recognition standards

(2) When an Institution receives in payment of debts or by adjudication at auction within

lawsuits related to Credits in its favor, or when exercising the rights that they confer the

operations that they celebrate in accordance with the LISF, assets, rights, titles or values, that should not

keep in their asset, shall sell them within a term of one year from their acquisition, when

it comes to titles or movable goods; of two years when it comes to urban real estate; and of three

years when it comes to commercial or industrial establishments, or to rustic real estate. These

terms may be renewed by the Commission when it is impossible to effectuate their sale in time without great loss for the Institution.

(3) Expired the terms or, in their case, the renewals that are granted from them, the Commission

will administratively put up at auction the assets, rights, titles or values that have not been

sold;

Valuation standards

(4) The assets acquired through judicial adjudication shall be registered on the date when

the approving order of the auction becomes final through which the adjudication was decreed.

(5) The assets that have been received through dation in payment shall be registered, for their part, on the

date on which the deed of dation is signed, or on the date on which the transmission

of the property of the asset was formalized.

(6) The recognition value of the Adjudicated Assets will be equal to its Adjudication Value

deducted from the costs and expenses strictly indispensable that are expended in their adjudication.

(7) When the value of the asset that gave origin to the adjudication, is superior to the value of the adjudicated asset,

the difference shall be recognized in the results of the exercise as other expenses of the

operation.

(8) When the value of the asset that gave origin to the adjudication net of estimates was inferior to the

value of the adjudicated asset, the value of the latter shall 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, shall 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 of the entity, such transfer can be carried out

at its adjudication value in the item of the Balance Sheet that corresponds to it

according to the asset in question, provided that it is fulfilled that the assets are

used for the realization of its object and is carried out in accordance with the investment strategies and

purposes of the entity that are previously established in its manuals, there being no

possibility that said assets can be considered again 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, shall be presented in the item of other income

(expenses) of the operation, as appropriate.

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

the operation.

Derivative financial instruments and hedging operations (B-16)

(1) For the accounting registration of Derivative Financial Operations they shall adhere to what

is stated in the minimum catalog to which Criterion C-1 of this Annex refers, to the criterion

B-2 of these Provisions, as well as what is established 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 can be carried out solely and exclusively for hedging purposes. In this sense, all

operations with derivative products shall 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 hedged them, shall be cancelled or linked to a new instrument that requires

this coverage.

The support staff of the Institution or Mutual Society shall 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 shall have auxiliary records with the purpose of identifying with clarity

the Derivative Financial Operations;

The support staff shall 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

shall adhere to the conditions to consider an instrument as a hedge, in accordance with the Financial Information Standard (NIF) that the CINIF issues for such effect and

shall be accounted for in accordance with what is established in the last paragraph of the

present

criterion;

The settlements required in the operation with derivative products, shall be carried out

by the support staff under authorized instructions and verified amounts, and

For the operations of the registration of derivatives, a detailed control shall be kept through

auxiliaries for each of the concepts that affect them.

Effects of inflation (B-17)

(1) The Institutions and Mutual Societies shall adhere to the guidelines established

in NIF B-10, provided that they do not oppose the accounting criteria that are stated in the

following paragraphs.

(2) When the economic environment is qualified as non-inflationary, the Institutions and Mutual Societies

must perform appraisals on their real estate at least every 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 force, until such time as a

new appraisal is performed; the increase determined between the difference of the last re-expression against the

appraisals, shall be registered in the item "Increase by Valuation of Real Estate" of the asset, against

the item "Surplus by Valuation of Real Estate" of the accounting capital.

(3) In the case that an inflationary environment is presented, the Institutions and Mutual Societies

, to adequately reflect the effects of inflation, must consider as non-monetary items the items stated in the following paragraph and its updating procedure will be carried out as mentioned below.

(4) Below are summarized the main items or non-monetary items: (i) Real Estate,

accumulated depreciation and the depreciation of the period; (ii) Reserve for Risks in Course; (iii)

Recoverable Amounts from Reinsurers; (iv) Reserve for Catastrophic Risks; (v) Reserve

Contingency Reserve; (vi) Participation of Reassurers in the Contingency Reserve; (vii) Reserves for Labor Obligations, and (vii) Shareholders' Equity.

Real Estate

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

(6) In the event that Institutions and Mutual Societies have registered a surplus of real estate during a non-inflationary economic environment, determined by the difference between the last reexpression and the appraisals conducted, the balance reported under the item "Surplus from Real Estate Valuation" must be considered in the adjustment determined to recognize the cumulative effects of inflation that existed during all periods in which a non-inflationary environment was maintained;

Depreciation

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

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

(9) The profits of previous periods shall not be affected by the update of accumulated depreciation, even if it implicitly includes the correction to the estimated useful life;

Technical Reserves and Reserves for Labor Obligations

Balance Sheet Accounts

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

(11) Inasmuch as these reserves, as of the date of the financial statements, are valued in constant pesos, it is not necessary to perform any reexpression adjustment, and

ii.

Income Statement Accounts

(12) The increase recorded in results must contemplate the reexpression adjustment, as follows:

(13) The reexpression adjustment in the income statement relative to the net increase in the reserves in question shall 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) on the date of the financial statements by the UDI on the date of the close of the previous year or period.

(14) The adjustment determined in accordance with the above shall be recorded as a debit to the temporary account (Reexpression Correction), and the monetary effect resulting in results shall be recorded in the increase account of each of the reserves.

Shareholders' Equity

(15) To update the initial balances of the different items of shareholders' equity, 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 that correspond to the exercise in which they originated;

Accounting Record

(16) The accounting record of the effects of inflation on 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 through some key or device that allows preparing a trial balance that comprises exclusively the sub-items that are updated, which must be consolidated with the balance of historical figures, to generate a balance of reexpressed figures.

Claims (B-18)

(1) Institutions operating Sureties in accordance with what is stated in article 303 of the LISF must keep the record of claims received from the beneficiaries of the issued policies up to date. This record will be the basis for following up on the deadlines regarding the integration of the claim, for the payment of the claimed amount.

(2) Institutions operating Sureties must invariably enter in their accounting, in the off-balance sheet items "Claims Received" and "Claims Pending Verification", the amounts claimed by the beneficiaries and must reflect them 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 shall 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" shall 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 adequately affect the sub-items provided for in the minimum catalog, in order to clearly and reliably distinguish the origin and status of the respective claim; whether by the receipt of integrated and pending integration claims, claims in litigation, and contingencies in litigation.

(6) In accordance with what is provided by 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 of receipt of the respective request, to provide the required documentation and information, and if they do not do so within said term, the claim shall be considered integrated. Likewise, if Institutions operating Sureties do not make use of the right referred to in this paragraph, the beneficiary's claim shall 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 improcedence.

(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 what is indicated in article 298 of the LISF and Criterion B-7 Debtors, "II. Debtors for Surety Responsibilities". The registration of the aforementioned liability must be made independently of the permanence of the record of the received claim in off-balance sheet accounts.

(9) When, for 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 the accounting record thereof, 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 improcedence, as appropriate, supported by the relevant supporting documentation.

(11) When there are disagreements on the part of the beneficiaries as a result of the evaluations that result in the improcedence or partial procedence of the received claims, such circumstances must also form part of the file mentioned in this Provision, and in general, they must keep the documentation of all negotiations carried out between the involved parties.

(12) In the case of received claims determined as procedent, 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 off-balance sheet account "Claims Received" will be cancelled, adhering to Criterion B-7 Debtors, "II. Debtors for Surety Responsibilities" for the registration of paid claims.

(13) If Institutions operating Sureties resolve the received claim as improcedent, they must cancel the record in the respective off-balance sheet accounts, and in this case, must have at least the acknowledgment or received stamp from the beneficiary of the document where the Institution communicates to them the reasons, causes, or motives for its improcedence.

(14) Claims that are determined as totally or partially improcedent during the exercise, in the terms of the previous paragraph, must be registered in the off-balance sheet account "Claims Cancelled of the Exercise" and the corresponding cancellation for the participation of reassurers in the item "Participation of Cancelled Claims".

(15) Institutions operating Sureties may determine the partial procedence of the received claim, and must have the elements that justify the amount determined as procedent. 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, cancelling the record in the off-balance sheet accounts of received claims for the amount covered to the beneficiary. As for the remainder, it must remain in the off-balance sheet 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 improcedence 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 procedence of payment of the sureties, except in those cases that are in litigation. Independently of the previous procedure, the Commission may order the constitution of liabilities charged to results, in those claims that so require;

(17) When there is disagreement on the part of the beneficiary regarding the improcedence or partial procedence determined by Institutions operating Sureties and they have gone before CONDUSEF, submitting to its conciliation, arbitration, or to the competent courts, the registration procedure to be followed will be the following:

The amount registered in the off-balance sheet account "Claims Received" shall 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 improcedence or partial procedence 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 for Surety Responsibilities, and

In the case of resolution in favor of the Institutions operating Sureties on the declination of improcedent claims, the total amount registered in the off-balance sheet account "Claims Received" must be cancelled. In the case of partial procedence, 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 inform the Commission, through Format I indicated in this provision, the initial balance, the increases and decreases 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 charged to 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 report the total balance corresponding to each sub-item without identifying the name of the sureties, in the event that such claims are part of the 80% of the balance of the item Received Claims.

II.

In the column named "Surety No.", the number of the surety and, in its case, the inclusion or paragraph must be noted.

III.

In the column of recovery guarantees, in the one related to "Type*", the letter or letters that identify the total of the guarantees with which each claim has, according to the types of guarantee 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 those surety institutions to inform this Commission, in its case, of the causes that originated the decrease of such 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 do not form part of the report of the previous month must be presented in the column of "Increases of claims (1)", notwithstanding that in the records of those surety institutions they report balances in the immediately preceding month, so they should not use the aforementioned 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__

SUB-ACCOUNT / Name of Surety

Balance of claims of the month immediately preceding the one being reported (1)

Movements of received claims 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 INSURANCE AND SURETY COMMISSION

DETAILED RECEIVED CLAIMS

FIGURES AS OF _____ OF ____________________ of 20__

SUB-ITEM/Name of Surety

Claim No.

Claim Date dd/mm/yyyy

Surety No.

Name of Beneficiary

RAMO

SUB-RAMO

Amount of surety responsibility

Recovery Guarantees

Balance of claims of the month immediately preceding the one being reported (1)

Movements of received claims 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 decrease (I, P, D, T, S, O)

RECEIVED CLAIMS

Receipt of Claims. Of the Exercise, for Direct Sureties