Authorization for Virginia Surety Company, Inc. to Organize and Operate Virginia Surety Mexico, S.A. de C.V.

DOF: 17/06/2016

OFFICE LETTER granting authorization to Virginia Surety Company, Inc.

A seal bearing the National Coat of Arms, which reads: United Mexican States.- Ministry of Finance and Public Credit.- Secretary.- 100.-27.

Mr. LEONEL PEREZ NIETO DEL PRADO IN REPRESENTATION OF

VIRGINIA SURETY COMPANY, INC. TWG HOLDINGS, INC.

THE WARRANTY GROUP, INC.

The Federal Government, through the Ministry of Finance and Public Credit, based on the provisions of Article 90 of the Political Constitution of the United Mexican States; Article 31, fraction VIII of the Organic Law of the Federal Public Administration; Articles 5, 33-A, fraction I, and 33-C of the General Law of Insurance and Mutual Societies; applicable in accordance with Transitional Provisions First and Fifth of the Insurance and Surety Bond Institutions Law; as well as Article 6, fraction XXII of the Internal Regulations of the Ministry of Finance and Public Credit; in relation to the North American Free Trade Agreement, issues the resolution indicated below, considering the following background and considerations:

BACKGROUND

I. With a letter dated October 15, 2014, Mr. Leonel Pereznieto del Prado, on behalf of TWG Holdings, Inc., Virginia Surety Company, Inc., and The Warranty Group, Inc., personality which he accredited with public deeds numbers 43,114; 43,115 and 43,116, respectively, all dated October 3, 2014, granted before the notary public Licentiate José Luis Villavicencio Castañeda, Public Notary number 218 of Mexico City:

a) Requested authorization for the organization and operation of a subsidiary insurance institution, which would be named, if authorization is obtained, Virginia Surety Seguros de México, S.A. de C.V., whose foreign financial institution will be Virginia Surety Company, Inc., through TWG Holdings, Inc., a related company of the latter, both incorporated in the United States of America, and its corporate purpose would be the practice of damage insurance, in the lines of diverse and automobiles referred to in Article 7, fraction III, subsections e) and i) of the General Law of Insurance and Mutual Societies. He also stated that the second shareholder of said subsidiary would be The Warranty Group, Inc., and

b) Partially presented the documentation referred to in Article 16 of the General Law of Insurance and Mutual Societies, to obtain the requested authorization.

II. Through office letter 366-III-0998/14 dated November 21, 2014, the Deputy General Directorate of Insurance, Surety Bonds and Pensions, attached to the Insurance, Pensions and Social Security Unit, based on the second paragraph of Article 2 Bis of the General Law of Insurance and Mutual Societies, required the applicant to present the curriculum vitae of the person who will serve as the director of customer services of the insurance institution to be constituted and indicate who will hold the position of regulatory controller, sending the curriculum vitae, which must contain nationality, address, and current occupation.

III. With a letter dated December 19, 2014, Mr. Leonel Pereznieto del Prado, on behalf of Virginia Surety Company, Inc., TWG Holdings, Inc., and The Warranty Group, Inc., in response to the office letter mentioned in Background II, presented the required information and documentation. He also made some clarifications regarding the positions that executives up to the first two levels will occupy in Virginia Surety Seguros de México, S.A. de C.V.

IV. Through office letter 366-III-044/15 dated January 21, 2015, the Insurance, Pensions and Social Security Unit, through the Deputy General Directorate of Insurance, Surety Bonds and Pensions, requested an opinion from the National Insurance and Surety Bond Commission regarding the requested authorization and for this purpose sent it a copy of the same, as well as the information and documentation presented for this reason.

V. With a letter dated November 4, 2015, Mr. Allan Galileo Olmedo Villegas, on behalf of TWG Holdings, Inc., Virginia Surety Company, Inc. and The Warranty Group, Inc., personality which he accredited with public deeds numbers 43,114; 43,115 and 43,116, dated October 3, 2014, submitted the general plan of operation of the insurance institution to be constituted, which includes the duly updated financial projections.

VI. With a letter dated December 8, 2015, Mr. Allan Galileo Olmedo Villegas, on behalf of Virginia Surety Company, Inc., TWG Holdings, Inc., and The Warranty Group, Inc., submitted the updated financial projections, in which it is established that the total share capital with which Virginia Surety Seguros de México, S.A. de C.V. intends to be constituted is the amount of $80,000,000.00, of which the amount of $40,000,000.00 will correspond to the minimum fixed part paid and without right to withdrawal and the remaining $40,000,000.00 will correspond to the variable part of the share capital.

VII. The National Insurance and Surety Bond Commission, with office letter 06-C00-41100/00156 dated January 11, 2016, in response to the request made in the different cited in Background IV, issued a favorable opinion regarding the request for authorization for the organization and operation of a subsidiary insurance institution that, if applicable, would be named Virginia Surety Seguros de México, S.A. de C.V. For this purpose, the Commission states that it considered the information and documentation indicated in the letters of October 15 and December 19, 2014, November 4 and December 8, 2015, mentioned in Backgrounds I, III, V and VI.

CONSIDERATIONS

I. That with letters dated October 15 and December 19, 2014, November 4 and December 8, 2015, the necessary requirements to request an authorization to organize and operate as a subsidiary insurance institution, provided for in Article 16 of the General Law of Insurance and Mutual Societies and the Fifth, Sixth and Ninth of the Rules for the Establishment of Subsidiaries of Foreign Financial Institutions, published in the Official Gazette of the Federation on April 21, 1994, applicable in accordance with Transitional Provision Third of the Rules for the Establishment of Subsidiaries of Foreign Financial Institutions, published in the Official Gazette of the Federation on December 31, 2014, were presented.

II. That the National Insurance and Surety Bond Commission, with office letter 06-C00-41100/00156 dated January 11, 2016, issued a favorable opinion regarding the request for the organization and operation of the subsidiary insurance institution to be named Virginia Surety Seguros de México, S.A. de C.V.

III. That from the analysis of the request, as well as the information and documentation received, the Deputy General Directorate of Insurance, Surety Bonds and Pensions attached to the Insurance, Pensions and Social Security Unit, verified that from a legal and administrative point of view it is appropriate to grant the requested authorization.

IV. That the General Law of Insurance and Mutual Societies was repealed on April 4, 2015, the date on which the Insurance and Surety Bond Institutions Law entered into force.

V. That Transitional Provision Fifth of the Insurance and Surety Bond Institutions Law provides that requests for authorization or approval received by the Ministry of Finance and Public Credit before the entry into force of the Insurance and Surety Bond Institutions Law, and which by virtue thereof are assigned to the National Insurance and Surety Bond Commission, will be processed and resolved by said Ministry, for which it may, even after the entry into force of said Law, continue to exercise the powers conferred based on the General Law of Insurance and Mutual Societies and the Federal Law of Surety Bond Institutions that are repealed.

VI. That Transitional Provision Seventh of the Insurance and Surety Bond Institutions Law stipulates that insurance institutions may continue to operate without the need to obtain new authorization, being subject in the future to the Insurance and Surety Bond Institutions Law and for this reason it has been deemed convenient to specify in the authorization some of the provisions of the current Law that are applicable.

RESOLUTION

FIRST.- In exercise of the power conferred on the Federal Government by Articles 5 and 33-C, in relation to Article 33-A, fraction I, of the General Law of Insurance and Mutual Societies, applicable in accordance with Transitional Provisions First and Fifth of the Insurance and Surety Bond Institutions Law, the Ministry of Finance and Public Credit grants authorization to Virginia Surety Company, Inc. to carry out the organization and operation of a subsidiary insurance institution through the related company TWG Holdings, Inc., under the following terms:

First.- The corporate name of the subsidiary insurance institution will be "Virginia Surety Seguros de México", which will be followed by the words Sociedad Anónima de Capital Variable or its abbreviations S.A. de C.V.

Second.- Virginia Surety Seguros de México, S.A. de C.V., once constituted, will be authorized, in terms of what is provided in Article 7, fraction III, subsections e) and i) of the General Law of Insurance and Mutual Societies and Article 25, fraction III, subsections e) and k) of the Insurance and Surety Bond Institutions Law, to carry out damage operations, in the lines of diverse and automobiles.

Third.- Virginia Surety Seguros de México, S.A. de C.V. must have the minimum paid capital determined for the year in question, for each line authorized, expressed in Investment Units and which must be covered in national currency, as ordered by Article 29, fraction I of the General Law of Insurance and Mutual Societies and Article 49 of the Insurance and Surety Bond Institutions Law.

Fourth.- Its corporate domicile will be Mexico City, United Mexican States.

Fifth.- In what is not expressly stated in this resolution, Virginia Surety Seguros de México, S.A. de C.V. will be subject to the Insurance and Surety Bond Institutions Law, the provisions emanating from it, the General Law of Commercial Societies, and the rest of the legislation, norms and regulation, which by their very nature are applicable to it.

Sixth.- The subsidiary insurance institution will be subject to the inspection and supervision of the National Insurance and Surety Bond Commission in accordance with Article 106 of the General Law of Insurance and Mutual Societies and Article 382 of the Insurance and Surety Bond Institutions Law.

Seventh.- The authorization referred to in this resolution is, by its very nature, non-transferable, in terms of what is provided in Article 7 of the General Law of Insurance and Mutual Societies and Article 11 of the Insurance and Surety Bond Institutions Law.

SECOND.- This authorization, as established in Article 11 of the Insurance and Surety Bond Institutions Law, is subject to:

a) That the subsidiary insurance institution present for approval of the National Insurance and Surety Bond Commission the first copy of the public deed in which the constitution of the subsidiary insurance institution is formalized, within ninety days following this authorization, and

b) That the subsidiary insurance institution begin its operations within the period of one hundred eighty days from the approval of its deed, for which purpose it must have the favorable opinion issued by the National Insurance and Surety Bond Commission, in accordance with Article 47 of the Insurance and Surety Bond Institutions Law.

This Resolution is issued based on the information and documentation provided by the promoters and is limited solely and exclusively to the authorization granted for the organization and operation of a subsidiary insurance institution that will be named Virginia Surety Seguros de México, S.A. de C.V., which in accordance with the applicable provisions falls within the competence of this Ministry to resolve.

TRANSITIONAL

ONLY.- This authorization must be published in the Official Gazette of the Federation in terms of what is provided in Article 33-C of the General Law of Insurance and Mutual Societies, at the expense of the interested parties.

Mexico City, May 5, 2016. - The Secretary, Luis Videgaray Caso. - Rubric.

(R.- 432858)

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