DOF: 14/06/2018

Modifying Circular 6/18 of the Single Insurance and Surety Circular

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

MODIFYING CIRCULAR 6/18 OF THE SINGLE INSURANCE AND SURETY CIRCULAR

(Provisions 3.1.5., 3.2.5., 22.1.2. and 38.1.3. and Annexes 8.20.2., 22.1.2. and 23.1.8.)

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 their integration and homogenizing the terminology used, in order to thereby provide legal certainty regarding the regulatory framework to which insurance institutions and mutual societies, surety institutions, and other persons and entities subject to the inspection and supervision 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 related to technical, contractual, and accounting aspects foreseen in the Single Insurance and Surety Circular.

That Article 69 of the Law of Insurance and Surety Institutions establishes that Institutions and Mutual Societies must have an effective corporate governance system that guarantees a sound and prudent management of their activity, whose implementation and monitoring will be the responsibility of their board of directors.

That subsection a), fraction I, of Article 70 of the same legal instrument establishes that the board of directors has the inalienable obligation to define and approve the corporate governance system of the Institutions and Mutual Societies, in terms of what is provided by Article 69 cited above, the mechanisms to monitor and evaluate its operation and compliance on a permanent basis, as well as the measures that result necessary for its proper functioning.

That it is necessary to modify Provision 3.1.5. of the Single Insurance and Surety Circular, in order to specify that as part of the evaluation of the implementation and functioning of the corporate governance system of the Institutions and Mutual Societies referred to above, and which is currently already reported to the National Insurance and Sureties Commission, the document or documents in which the operation, functioning, as well as the norms, policies, criteria, and codes are described must be included, that is, where the aforementioned corporate governance system is defined and approved, as referred to in fraction I of Article 70 of the Law of Insurance and Surety Institutions, in relation to Article 69 of that same instrument, as well as Chapter 3.1 of the aforementioned Single Insurance and Surety Circular, with the object that the National Insurance and Sureties Commission has the complete information to carry out its supervision and surveillance functions.

That in accordance with the already described regulations, the definition and approval of the corporate governance system is an integral part of its implementation, as well as the respective modifications made by the Institutions and Mutual Societies, as applicable; therefore, the required documentation is information that the Institutions and Mutual Societies already have as part of their operation, without modifying the structure of information delivery of the Regulatory Report on Corporate Governance (RR-2).

That it is necessary to modify Provision 3.2.5. of the Single Insurance and Surety Circular, in order to provide legal certainty regarding the form and terms in which the Self-Assessment of Institutional Risks and Solvency must be made available to the board of directors of the Institutions and Mutual Societies, by the Risk Management Area of the same.

That the modification to Provision 38.1.3. of the Single Insurance and Surety Circular is made with the purpose of providing legal certainty regarding the form and terms for the presentation before the National Insurance and Sureties Commission of the documentation referred to in Provision 3.1.5. of the same legal instrument.

That fraction V of Provision 8.20.2. of the Single Insurance and Surety Circular establishes that among the elements that must be considered for the estimation of Reinsurance Recoverable Amounts are the probabilities of default of the counterparties, which are determined based on their credit ratings; therefore, in order for the risk of a counterparty with a BBB credit rating to be consistent with the principles on which the confidence level of the Solvency Capital Requirement was established, provided in fraction III of Article 235 of the Law of Insurance and Surety Institutions, it is necessary to update the percentage of the probability of default for the aforementioned credit rating provided in Annex 8.20.2. of the Single Insurance and Surety Circular, and it is also necessary to update the said Annex to include in it the definition of the probabilities of default that must be used to determine the Reinsurance Recoverable Amounts due from an Atomic Pool.

That as part of the homogenization process with the Financial Information Standards (NIF) issued by the Mexican Council for Research and Development of Financial Information Standards, A.C. (CINIF), the National Insurance and Sureties Commission has carried out an analysis of its accounting criteria in order to identify and eliminate, as much as possible, the existing differences between the NIF and the accounting criteria applicable to the insurance and surety sectors.

That Transitory Provision Twenty-Sixth of the Single Insurance and Surety Circular establishes that the modifications and additions foreseen in the general provisions emanating from the Law of Insurance and Surety Institutions must be considered from the preparation of the financial statements corresponding to the close of the month of January 2016.

That through Annex 22.1.2. of the Single Insurance and Surety Circular, the National Insurance and Sureties Commission made known the accounting criteria applicable from the 2016 exercise, so that insurance institutions and mutual societies present their assets, liabilities, capital, results, and off-balance sheet accounts adequately; therefore, it is necessary to make some clarifications to the accounting criteria applicable from the 2016 exercise, derived mainly from the changes registered in the accounting estimates of assets and liabilities due to the entry into force of the Law of Insurance and Surety Institutions, as well as to update the references to the NIF that entered into force from January 1, 2018, in order to provide legal certainty regarding the form and terms in which the accounting criteria established in the aforementioned Annex 22.1.2. must be applied.

That in accordance with what is provided in Article 312 of the Law of Insurance and Surety Institutions, the National Insurance and Sureties Commission, through general provisions, may establish the content of the opinions and other reports of independent external auditors, dictate measures to ensure adequate alternation of said auditors in insurance institutions and mutual societies, as well as indicate the information that must be revealed in their opinions, regarding other services and, in general, regarding professional or business relationships that they provide or maintain with the insurance institutions and mutual societies they audit, or with related companies.

That in attention to the above, it is necessary for the National Insurance and Sureties Commission to make some clarifications to Annex 23.1.8. of the Single Insurance and Surety Circular for the correct submission of the audit program of independent external auditors, without this modifying the structure of information delivery referred to in the aforementioned Annex 23.1.8 in relation to that currently carried out.

Therefore, for the reasons stated above, the National Insurance and Sureties Commission has resolved to issue the following modification to the Single Insurance and Surety Circular in the following terms:

MODIFYING CIRCULAR 6/18 OF THE SINGLE INSURANCE AND SURETY CIRCULAR

(Provisions 3.1.5., 3.2.5., 22.1.2. and 38.1.3. and Annexes 8.20.2., 22.1.2. and 23.1.8.)

FIRST.- Provisions 3.1.5., 3.2.5., 22.1.2. and 38.1.3. of the Single Insurance and Surety Circular are modified to read as follows:

3.1.5.

...

This evaluation and the copy of the respective board of directors meeting minutes, as well as the documents in which the definition and the approval act by the board of directors of the Institution's corporate governance system are recorded, as referred to in fraction I of Article 70 of the LISF, in relation to Article 69 of that same instrument and its modifications, must be presented to the Commission as part of the Regulatory Report on Corporate Governance (RR-2), in terms of what is provided in Chapter 38.1 of these Provisions.

3.2.5.

...

I.

...

II.

Make available to the board of directors, for its review and, if applicable, approval, the Self-Assessment of Institutional Risks and Solvency (hereinafter, "ARSI") during the first semester of the exercise immediately following the evaluated one;

III.

a VIII.

...

22.1.2.

...

I.

...

II.

...

a) to v) ...

w) Leases (B-23),

x) Co-insurance operations (B-24), and

y)

Surety Insurance (B-25).

III.

...

38.1.3.

...

I. The annual evaluation of the implementation and functioning of the corporate governance system, as well as the documents in which the definition and the approval act by the board of directors of the Institution's corporate governance system are recorded, to which Provision 3.1.5. refers;

II. to IX.

...

...

SECOND.- Annexes 8.20.2., 22.1.2. and 23.1.8. of the Single Insurance and Surety Circular are modified.

TRANSITORY PROVISIONS

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

SECOND.- What is established in Annex 8.20.2. of the Single Insurance and Surety Circular will be applicable from July 1, 2018.

This 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, May 30, 2018. - The President of the National Insurance and Sureties Commission, Norma Alicia Rosas Rodríguez.- Rubric.

ANNEX 8.20.2.

PROBABILITIES OF DEFAULT

Institutions, for the purposes of calculating the Reinsurance Recoverable Amounts referred to in fraction V of Provision 8.20.2., must use the probabilities of default, according to the following:

Standard & Poor's	A.M. Best	Fitch	Moody's	HR Ratings	Probability of Default
AAA	A++, A+	AAA	Aaa	HR AAA (G)	0.002%
AA+, AA, AA-	A, A-	AA+, AA, AA-	Aa1, Aa2, Aa3	HR AA+ (G)+, HR AA (G), HR AA- (G)	0.05%
A+, A, A-	B++, B+	A+, A, A-	A1, A2, A3	HR A+ (G), HR A (G), HR A- (G)	0.18%
BBB+, BBB, BBB-	BBB+, BBB, BBB-	Baa1, Baa2, Baa3	HR BBB+ (G), HR BBB (G), HR BBB- (G)	0.50%
BB+, BB, BB-	B, B-	BB+, BB, BB-	Ba1, Ba2, Ba3	HR BB+ (G), HR BB (G), HR BB- (G)	0.87%
B+, B, B-	C++, C+	B+, B, B-	B1, B2, B3	B+, B, B-	4.29%
CCC or lower	C, C-, D or lower	CCC or lower	Caa1 or lower	HR CCC (G) or lower	30.65%
Not rated					30.65%

In the particular case of Reinsurance Recoverable Amounts due from an Atomic Pool, for the purposes of using the default probabilities from the table above, the credit rating of the leader must be considered. In this sense, for each Atomic Pool, the leader will be the Foreign Reinsurer that presents a greater participation in Mexican nuclear risks regarding material damage, in terms of the coverage in force due from the said Atomic Pool. In the event that within an Atomic Pool, two or more Foreign Reinsurers present the greatest participation simultaneously, the greatest probability of default must be considered according to the table above, based on the credit ratings of the Foreign Reinsurers that share the greatest participation.

ANNEX 22.1.2.

ACCOUNTING CRITERIA APPLICABLE TO INSTITUTIONS, MUTUAL SOCIETIES AND HOLDING COMPANIES

CONTENTS

Glossary of Terms.

Series I.
Criteria relative 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 relative to the 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 reinsureds (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) Salvages (B-19).

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

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

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

w) Leases (B-23).

x) Co-insurance operations (B-24).

y) Surety Insurance (B-25).

Series III
Criteria relative to the basic consolidated financial statements.

a) Minimum catalog (C-1)

b) Balance sheet (C-2);

c) Statement of results (C-3);

d) Statement of cash flows (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 derived 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 dación en pago (transfer of property in payment of debt).

(4) Overdue Portfolio, in attention to Provision 8.14.69. Fraction I, is that which is composed of credits whose borrowers are declared in commercial bankruptcy, or well, whose principal, interest, or both, have not been liquidated in the terms originally agreed, considering for this effect 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 principal or interest payments overdue 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) Co-insurance, in accordance with fraction V of Article 2 of the Law of Insurance and Surety Institutions, Co-insurance 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 Co-insurer, will be that insurance institution that is in charge of processing the delivery of the insurance policy(ies) to the insured, managing the collection of the total amount, paying the agent their commission, attending to claims and, if applicable, making the corresponding payment and marketing the salvages, on behalf of itself and the other co-insurer, who in turn will have the obligation to cover the expenditures that for the concept of Co-insurance administration have been agreed in the respective contract.

(9) Non-Leading Co-insurer, will be that insurance institution that will have the obligation to cover the expenditures made by the Leading Co-insurer 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 due to the surety's non-compliance is pending resolution, unless the suspension obtained by said surety against the execution of the rescission is taking effect; or unless the surety policy has expressly agreed that its enforceability will be subject to a final decision on the principal obligation being issued in the means of defense promoted by the surety, and, 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 Titles, 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 the operations of: fund administration, medical services administration, payment administration to service providers, 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) Co-insurance Account Statement, document by which the Leading Co-insurer reports monthly to the other co-insurer the operations carried out on behalf of the latter in the percentage agreed in the Co-insurance contract celebrated between both parties, on premiums, commissions, claims, adjustment expenses, salvages, income and expenses for the administration by concept of Co-insurance, 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 issued sureties.

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

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

(20) Cash Flows, are entries and exits of cash and cash equivalents. They will not be considered

Cash Flows to movements between items constituting cash and cash equivalents, since these components are part of the management of cash and cash equivalents of the entity, rather than its operating, investing or financing activities.

(21) Urban Real Estate from Regular Products, those real estate properties that generate a product derived from their lease to third parties and those that, even when they are used for the own use of Institutions and Mutual Societies, 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 is 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, in a shorter period (for example, when there is the possibility of an early payment or redemption), with the net book value of said financial asset.

(23) Premiums in Deposit, will be represented by all those cash inflows for the payment of insurance and surety premiums that are received in advance or are pending application, as well as all those deposits registered in the 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.

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

1)
Expansion of guarantees covering the Credit in question, or

2)
Modifications to the original conditions of the Credit or to the payment scheme, among which are:

i.
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 compliance with 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 liquidated 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 involved. 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 being partly a receivable account and partly a payable account, have a determined term and generate Cash Flows for the holder of the titles throughout their term.

(28) Book Value, the balance of an investment in a title, including adjustments for valuation results, accrued but uncollected interest, dividends, impairment losses 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 title quoted in the Mexican market will be that provided by price providers. In the case of securities quoted on international exchanges, the Market Value or Price will be that made known by said organizations (price providers) through official publications.

(30) Fair Value, the amount for which a financial asset can be exchanged or a financial liability settled, between knowledgeable and willing parties in an arm's length transaction.

(31) Adjudication Value, that which is set 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 will be the price agreed upon by the parties. In the case of goods promised for sale or with reservation of ownership, it will 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 useful remaining time marked by the corresponding appraisal, from its date of preparation.

Series I. Criteria relating to the general accounting scheme.

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

(1) The accounting of Institutions and Mutual Societies will 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 will 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 Companies of Financial Groups subject to Inspection and Surveillance of the Commission" of these Provisions, the accounting criteria indicated in this Annex for Institutions and Mutual Societies shall be applicable, where relevant, to Controlling Companies.

(4) Regarding this, the regulation referred to in the previous paragraph will 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 applicable accounting criterion for any of the operations they carry out, issued by CINIF or by the Commission, the bases for subsidiarity provided in NIF A-8 will be applied, considering:

i.
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 process of subsidiarity will be replaced, at the moment that a specific accounting criterion is issued by the Commission, or an NIF, on the topic where said process was applied.

(6) Institutions and Mutual Societies that follow the supplementary process must communicate in writing to the Vice Presidency of Institutional Operation of the Commission, responsible for its supervision, within 10 calendar days following the application, the accounting standard that has been adopted supplementarily, as well as its basis of application and the source used. Additionally, they must carry out the corresponding disclosure in accordance with what is stated in Chapter 23.1 "Of the opinions and reports of independent external auditors" of these Provisions.

b)
Application of particular standards (A-2)

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

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

i.
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 its 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, if applicable, disclosure, established by 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:

1)
NIF B-1 "Accounting Changes and Corrections of Errors".- When resulting from the supervision activities carried out by the Commission and in accordance with the functions performed by external auditors and the comisario, as well as from the activities carried out by board members, general managers, directors and managers, internal auditors and other officials in charge of directing and controlling the operations of Institutions and Mutual Societies, errors in the accounting registration of their operations, accounting changes or any other situation that 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. They must also present again to the Commission the quarterly or annual information that they improperly reported in accordance with what is stated in Title 22 of these Provisions.

In the case that Institutions and Mutual Societies prove that they fall under any of the scenarios indicated in paragraph 23 of NIF B-1 and provide evidence supporting their argument that it is impracticable to carry out error corrections for all prior affected periods, or that the effects for a specific period will have, they are obligated to disclose said situation in accordance with what is stated in Chapter 23.1 "Of the opinions and reports of independent external auditors" of these Provisions.

2)
NIF B-15 "Foreign Currency Translation".- With regard to the valuation of foreign currency operations 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:

i.
What is established in NIF B-15 "Foreign Currency Translation" will 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 will be the FIX exchange rate published by the Bank of Mexico in the Official Gazette of the Federation on the date of the transaction or preparation of the financial statements, as applicable, which is published on the next business day after those dates.

iii.
A position will be established for each currency managed;

iv.
To the determined position, the equivalence of currencies from 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, will be applied;

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

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

3)
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 stated in NIF C-8. In the case of operations that generate a Commercial Credit, such authorization will not be necessary.

4)
NIF C-9 "Provisions, contingencies and commitments".- Institutions and Mutual Societies must observe the criteria indicated in NIF C-9 "Provisions, contingencies and commitments", except when it comes to the following aspects:

i.
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 "On Reinsurance, Reaffirmation and other risk and liability transfer mechanisms" of these Provisions.

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

iv.
Subordinated obligations not convertible into shares and other debt instruments .- The subordinated obligations not convertible into shares and other debt instruments issued by the entity must be registered as a liability, likewise registering the amount to be paid for the obligations and other debt instruments issued according to the Nominal Value of the titles.

It will register the amount of accrued interest payable derived from 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 Other Creditors, indicated in the minimum catalog referenced by Criterion C-1 of this Annex, corresponding to the issuance of debt instruments.

In the case of issuance and placement expenses for obligations not susceptible to conversion into shares and other debt 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 debt 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 bondholders.

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

5)
NIF C-11 "Equity".- For the case of real estate properties registered by Institutions and Mutual Societies, they must include the surplus from revaluation of real estate in accordance with what is stated in criterion B-6 "Real Estate" of this annex.

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

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

c)
Application of general standards (A-3)

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

1)
Restricted Assets.- Restricted assets must be registered as restricted assets for all those assets regarding which there are circumstances under which they cannot be disposed of or used, and must remain in the same item from which they originated. It will also be considered that assets coming from operations that do not settle on the same day, i.e., are received with a value date different from the negotiation date, form part of this category.

2)
Clearing Accounts.- The amount of overdue operations to be collected or to be paid resulting from the operations carried out by entities in matters of investments in securities, repo agreements, securities lending and derivatives, must be registered in clearing accounts once they reach maturity and until the corresponding settlement is perceived, as agreed in the respective contract.

Likewise, for operations where immediate settlement or same-day value date is not agreed upon, including foreign currency purchases and sales, at the negotiation date 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 calendar days following the date on which it was registered in clearing accounts, it will be reclassified as Overdue Portfolio and the estimation for uncollectibility or difficult collection must be simultaneously constituted for the total amount thereof.

3)
Accrued but Unrealized Interest.- Accrued interest for different asset or liability items must be presented in the Balance Sheet together with their corresponding principal.

4)
Recognition of assets and/or liabilities.- The recognition in the financial statements of assets and/or liabilities, including those arising from foreign currency purchase and sale operations, investments in securities, repo agreements, securities lending, derivatives and issued titles, will be carried out on the date the operation is negotiated, regardless of the settlement or delivery date of the good.

5)
Cancellation of assets and/or liabilities.- The cancellation in the financial statements of assets and/or liabilities, including those arising from foreign currency purchase and sale operations, investments in securities, repo agreements, securities lending, derivatives and issued titles, will be carried out on the date the operation is negotiated, regardless of the settlement or delivery date of the good.

6)
Valuation of UDI.- The value to be used will be that made known by the Bank of Mexico in the Official Gazette of the Federation (DOF), applicable on the date of valuation.

7)
Valuation of VSM (minimum wage multiples).- The value to be used will be that of the minimum wage corresponding, approved by the National Commission of Minimum Wages and made known in the DOF, applicable on the date of valuation.

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

a)
Availability (B-1)

Objective

(1) This section defines the particular application criteria of the norms relative to the registration, valuation, and presentation in the financial statements of the items that make up the availability item in the Balance Sheet of Institutions and Mutual Societies.

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

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

Valuation Standards

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

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

(6) Currencies acquired that are agreed to be settled on a date subsequent to the negotiation of the purchase and sale operation will be recognized on that negotiation date as a restricted availability (currencies to receive), while sold currencies will be registered as an outflow of availability (currencies to deliver). 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 of having been deposited, and those that have been deposited but have been returned, must be charged 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 other debtors. Once forty-five days have passed after registration in other 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 other creditors, even if other checking accounts with debit balances are maintained in the same institution.

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

1)
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 referenced in criterion B-11 of this annex.

2)
Investments in derivative instruments.

Classification

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

1)
Trading securities,

2)
Held-to-maturity securities, or

3)
Available-for-sale securities.

(5) The classification among the categories referred to in this fraction shall be made by the management of Institutions and Mutual Societies, based on their investment policy, the intention regarding the securities, as well as the financial capacity or ability to maintain the investment. The Held-to-maturity securities category shall be exclusively used by 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 standards in financial statements.

Debt Securities for Trading Purposes

(7) Debt Securities for trading purposes are those that the management of Institutions, Mutual Societies, and Controlling Companies holds in its own position with the intention of covering claims and/or operating expenses, and therefore, negotiating them in the short term prior to their maturity dates.

Recognition Standards

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

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

Valuation Standards

(10) Debt Securities for trading purposes shall be valued at their Fair Value, based on market prices provided by price providers or specialized official publications in international markets. In case these do not exist, the last price registered within the 20 business days prior to the 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 interests are collected, the item of investments in securities shall be decreased against the item of cash and cash equivalents.

(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) Gains or losses from exchange arising from investments in securities 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 record, 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 have the character of unrealized and, consequently, shall not be susceptible to capitalization nor to distribution of dividends among shareholders until they are realized in cash.

(16) Gains or losses from exchange arising from investments in securities 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 referenced in Criterion C-1 of this Annex.

Debt Securities Held-to-Maturity

(17) Only those 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 prevent the original intention, may classify values in the category of Debt Securities Held-to-Maturity.

(18) Insurance Institutions specialized in Pension Insurance shall not classify an instrument as held-to-maturity if it only has the intention of maintaining 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 Standards

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

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

Valuation Standards

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

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

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

(24) The valuation result of titles 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 record, 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 have the character of unrealized and, consequently, shall not be susceptible to capitalization nor to distribution of dividends among shareholders until they are realized in cash.

(26) Gains or losses from exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the period, considering for such purposes what is stated in the minimum catalog referenced in Criterion C-1 of this Annex.

Debt Securities Available for Sale

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

Recognition Standards

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

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

Valuation Standards

(30) Debt Securities available for sale shall be valued at their Fair Value, based on market prices provided by price providers or specialized official publications in international markets. In case these do not exist, the last price registered within the 20 business days prior to the 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 equity capital, until such time as said financial instruments are sold or transferred from 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 results statement.

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

(34) Gains or losses from exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the period, considering for such purposes what is stated in the minimum catalog referenced in Criterion C-1 of this Annex.

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

Equity Securities for Trading Purposes

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

Recognition Standards

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

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

Valuation Standards

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

(40) The adjustments resulting from the valuations referred to in the previous paragraph shall increase or decrease monthly, as appropriate, and shall be carried to results. In the case of operations 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 have the character of unrealized and, consequently, shall not be susceptible to capitalization nor to distribution of dividends among shareholders until they are realized in cash.

(42) Gains or losses from exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the period, considering for such purposes what is stated in the minimum catalog referenced in Criterion C-1 of this Annex.

(43) The valuation result of titles 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; those titles that were 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.

Equity Securities Available for Sale

(44) Equity Securities available for sale are those that the management of the Institution, Mutual Society, or Controlling Company, from the moment of investing in them, intends to negotiate them in a 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 Standards

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

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

Valuation Standards

(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 case these do not exist, the last price registered 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 equity capital, until such time as said 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 have the character of unrealized and, consequently, shall not be susceptible to capitalization nor to distribution of dividends among shareholders until they are realized in cash.

(50) Gains or losses from exchange arising from investments in securities denominated in foreign currency shall be recognized in the results of the period, considering for such purposes what is stated in the minimum catalog referenced in Criterion C-1 of this Annex.

Dividends

(51) Dividends from equity titles for trading purposes 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 thereof arises. When dividends are collected, the investment shall be decreased against the item of cash and cash equivalents.

Transfers of Categories

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

Financial Instruments Held-to-Maturity

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

Financial Instruments Classified as Available for Sale

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

Financial Instruments for Trading Purposes

(55) 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.

(56) Notwithstanding the foregoing, in the case that a financial instrument finds itself in a market that due to unusual circumstances beyond the control of the entity loses the characteristic of liquidity, said instrument may be transferred to the category of financial instruments available for sale or to the category of held-to-maturity, as appropriate, provided that said movement is consistent with the investment policy of the Institution. 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.

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

1)
Those Debt Titles, transferred from the held-to-maturity category to available-for-sale titles, 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 Debt Securities available for sale", indicated in the minimum catalog referenced in Criterion C-1 of this Annex, and

2)
Financial instruments classified as available for sale, transferred to the held-to-maturity category, the unrealized gains or losses, while maintained in their original category of available for sale and recognized as an item within equity capital, 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

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

(59) In all cases of early sales, approval from the investment committee of the respective Insurance Institution specialized in Pension Insurance 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 shortages derived from such operations.

(60) Likewise, they must present before the Commission within ten natural days following the close of the month in which the operation was effected, the documentation detailed below:

1)
Letter stating the reasons for such early sales;

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

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

Liquidating Accounts

(61) Regarding operations carried out by Institutions and Mutual Societies in matters of investments in securities, repurchase agreements, loan of securities, and derivatives, once these reach their maturity and while the corresponding liquidation is not perceived, as agreed in the respective contract, the amount of matured operations receivable or payable shall be registered in liquidating accounts (debtors or creditors for liquidation of operations).

(62) Values acquired that are agreed to be liquidated on a date subsequent to the negotiation of the buy-sell operation and that have been assigned, i.e., identified, shall be recognized as restricted values (to receive) at the time of negotiation, while sold titles shall be recognized as an exit of investments in securities (to deliver). 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 standards", of this Annex.

Impairment of Values

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

c)
Loan of Securities (B-3)

Objective

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

Recognition and Valuation Standards

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

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

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

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

Presentation Standards

(6) Off-balance sheet accounts recognized for financial assets received as guarantees shall be cancelled when the loan of securities operation reaches its maturity or there is default by the borrower.

d)
Repurchase Agreements (B-4)

Objective

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

Recognition and Valuation Standards

(2) On the date of contracting the repurchase agreement operation, acting as the Institution or Society

Mutualist entities acting as the Reporting Party must recognize the outflow of liquidity or a creditor clearing account, registering the debtor for the repurchase agreement initially measured at the agreed price, which represents the right to recover the cash delivered.

(3) During the life of the Repurchase Agreement, the debtor for the repurchase agreement 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 agreement debtor during the term of the operation.

Presentation Standards

(4) Financial assets that the Insurance Institution or Mutual Society has received as collateral must be registered as off-balance sheet accounts, following for their valuation the provisions established in this chapter.

(5) In the event that the reporting 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 Balance Sheet the entry of the collateral, according to the type of asset involved, against the aforementioned repurchase agreement 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 reporting party.

(7) Off-balance sheet accounts recognized for received collateral must be cancelled when the Repurchase Agreement reaches maturity or there is default by the reporting party.

e)

Loans (B-5)

Objective and Scope

(1) This section aims to define the specific norms 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:

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

2)
Accounting norms 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, according to what is provided in Title 22 of the General Provisions derived from the LISF.

Recognition and Valuation Standards

(4) The balance to be 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 will be added.

(5) The Outstanding Balance of Credits denominated in Minimum Wage Times (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 pending balance to be amortized shall be brought to the results of the fiscal year in the interest income item 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 item, 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 item.

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 what is established in accounting criterion B-15 "Adjudicated Assets" of this Annex.

Commissions Charged for the Initial Granting of the Credit

(8) Commissions charged for the initial granting of the Credit shall be 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 does 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 item.

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 to be only 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 clients, 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 item 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 Delinquent Portfolio

(14) The Outstanding Balance according to the conditions established in Credit contracts shall be registered as Delinquent Portfolio when:

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

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

i.
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) Delinquent Credits that are restructured will remain within the Delinquent 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 will be considered as Delinquent Portfolio.

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

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

Suspension of Interest Accumulation

(19) The accumulation of accrued interest on credit operations entered into with each debtor must be suspended at the moment the Outstanding Balance of the Credit is considered delinquent. 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, must be suspended at the moment the Outstanding Balance of the Credit is considered delinquent.

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

(21) While the Credit remains in the Delinquent Portfolio, control of accrued interest or financial income shall be maintained in off-balance sheet accounts. In the event that such delinquent interest or financial income is collected, it shall be recognized directly in the results of the fiscal year in the interest income item, cancelling in the case of capitalizable lease the corresponding Deferred Credit.

Unpaid Accrued Interest

(22) With respect to accrued but unpaid interest or financial income corresponding to Credits considered as Delinquent Portfolio, an estimate must be created for an amount equivalent to the total of these, at the time of the transfer of the Credit as Delinquent Portfolio.

(23) In the case of delinquent Credits where, in their Restructuring, the capitalization of previously recorded unpaid accrued interest registered in off-balance sheet accounts is agreed, the entity must create an estimate for 100% of said interest. The estimate can 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 must be calculated and registered monthly, affecting the preventive estimates for credit risks item of the asset against the sub-item of preventive write-offs for credit risks which is part of the Comprehensive Financing Result item, according to the minimum catalog of this Annex.

Write-offs, Eliminations, and Recoveries of Credit Portfolio

(25) The Institution or Mutual Society must periodically evaluate whether a delinquent Credit should remain in the 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 must 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 delinquent Credits that are 100% provisioned and do not meet the conditions to be written off. For such purposes, the Institution or Mutual Society must cancel the Outstanding Balance of the Credit against the Preventive Estimate for Credit Risks.

(27) Any recovery resulting from previously written-off or eliminated Credits must 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 must previously be constituted up to the amount of the difference.

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

(29) For the case of Credits denominated in foreign currency, in Minimum Wage Times, 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 according to the methodologies established for each type of Credit, the differential must be cancelled on the date that 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 item 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) Balance Sheet

1)
Loans or Credits shall be grouped into performing and delinquent, 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;

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

3)
The financial asset representing the financing granted to the assignee referred to in the portfolio subject to securitization shall be presented as part of the insured Credit portfolio;

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

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

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

7)
The amount of Credits from capitalizable lease operations, both performing and delinquent, shall be presented net of Deferred Credits;

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

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

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

11)
In off-balance sheet accounts, in the item of accrued but unpaid interest derived from delinquent Credit portfolio, the amount of accrued but unpaid interest derived from Credits that remain in Delinquent Portfolio shall be presented, as well as the financial income accrued derived from Credits in capitalizable lease operations.

Income Statement

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

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

(34)
Recoveries of previously written-off or eliminated operations shall be presented in the item of other 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 participation in the sale of assets in capitalizable lease to a third party, shall be presented in the item 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 income statement in the item of administrative and operational expenses (other expenses or income).

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

f)

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) Real estate investments carried out by Institutions and Mutual Societies must comply with the following:

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

2)
Appraisals of the real estate assets of Institutions and Mutual Societies must be conducted annually. The aforementioned term shall be calculated 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 depreciable value with the corresponding coverages.

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

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

Likewise, they must register the capitalization in off-balance sheet accounts: "Surplus from Capitalized Real Estate Appraisal" 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

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

Presentation Standards

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

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

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

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

(4) With regard to the registration of real estate under construction reflected in the "Real Estate Under Construction" item, they shall continue to register them at their acquisition value and until the works are completed 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" item, subjecting the latter to the update process in accordance with the established guidelines.

g)

Debtors (B-7)

Premium Debtors

(1) The premium or the corresponding fraction thereof that has not been paid within 30 calendar days following the date of its maturity, or in its case, within the shorter term agreed upon in the terms of article 40 of the Insurance Contract Law, 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 item of Debts Owed by Departments and Entities of the Federal Public Administration, indicated in the minimum catalog to which it refers

refers to Criterion C-1 of this Annex, balances that have an age greater than 45 natural days following the date of their maturity and that are backed by a national public bid in charge of the Dependencies and Entities of the Federal Public Administration or Federal Entities, which have entered, for the purposes of the bid, an agreement with the Federal Executive and that, according to 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 register separately 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 Guarantee Funds.

Estimation of doubtful collection and cancellation of premiums for return of surety bonds

(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) Therefore, mandatory liability insurance, surety insurance, and surety bonds cannot be cancelled for non-payment.

(9) In the cases of surety insurance referred to in paragraph 6, as well as premiums receivable for administrative sureties, when they present an age greater than 120 natural days from the start of validity, they must register an estimation of doubtful collection, and in the cases of liability insurance referred to in paragraph 5 and premiums receivable for sureties issued except administrative sureties, they will register such estimation when the age is greater than 90 days.

The Rights and Surcharges on policies

(10) The rights on policy derived from the expenses of issuing the policy, its modifications or reforms, which form part of the item of debtors for premium, must be registered by operation and branch in the line of Rights or Policy Products that forms part of the operating cost at the moment when the premiums are registered, in order to recognize in the same period the income for said concept, regardless of the date on which they are made.

(11) In the case of surcharges on premiums, which also forms part of the item of debtors for premiums, they must be registered against the liability account, surcharges on premiums to accrue and subsequently, affect results according to the accrual that is determined monthly, in the item of surcharges on premiums that forms part of the comprehensive result of financing.

Debtors for Surety Responsibilities

1)

(12) 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 debtors for surety responsibilities, 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;

2)

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 table annexed to this criterion, removing the charge to results previously made, regardless of its accounting in off-balance sheet accounts.

If this collection right is recognized in a subsequent exercise to that in which the payment was made, the registration will be made 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;

3)

The expenses incurred for the recovery of sureties claimed and paid, must be registered directly to results, as well as the income that is obtained on them at the time;

4)

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

5)

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 annexed to this criterion. To this effect, the collection right must be cancelled once the said term 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 accredit its registration;

6)

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;

7)

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

Percentages of recognition of collection rights (Debtors for surety responsibility)

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

0

0

0

Risk coverage for compliance that

devolution banks grant directly or through a

trust.

100

50

25

0

Pledge consisting of qualified values

issued by credit institutions or in

values subject to investment in accordance with

articles 131 and 156 of the LISF with

qualification of "Good" or "Adequate".

80

40

20

0

Pledge consisting of qualified values

issued by credit institutions or in

values subject to investment in accordance with

articles 131 and 156 of the LISF with

qualification lower than "Adequate".

50

25

10

0

Pledge consisting of money deposits

in credit institutions.

100

0

0

0

Pledge consisting of loans and credits

in credit institutions.

100

0

0

0

Guarantee or contingent letter of credit

from Credit Institutions.

100

0

0

0

"Stand By" Letter of Credit or Letter of

guarantee or contingent credit of

Foreign Credit Institutions

Qualified with qualification "Good or

Adequate".

100

0

0

0

"Stand By" Letter of Credit or Letter of

guarantee or contingent credit

Foreign Credit Institutions with

qualification lower than "Adequate".

25

0

0

0

"Stand By" Letter of Credit

notified or

Letter of guarantee or contingent credit

notified of Foreign Credit Institutions

with qualification of "Superior" or

"Excellent".

70

0

0

0

"Stand By" Letter of Credit

notified or

Letter of guarantee or contingent credit

notified of Foreign Credit Institutions

with qualification of "Good" or

"Adequate".

50

0

0

0

Counter-surety of Institutions, of

Foreign Institutions that are

registered in the RGRE with qualification of

"Good" or "Adequate", or of persons that

meet what is established in article 188

of the LISF.

100

0

0

0

Account Management.

100

0

0

0

Guarantee trusts on values that

meet what is provided in articles 131

and 156 of the LISF.

75

35

15

0

Mortgage.

75

75

15

0

Encumbrance in Guarantee

75

75

15

0

Guarantee trusts on real estate.

75

35

15

0

Indemnity Contract of foreign company

with a "Superior", "Excellent" or "Good" qualification.

75

20

10

0

Indemnity Contract of foreign company

with qualification of "Adequate".

25

0

0

0

Joint obligation in favor of the Institution,

of a Mexican or foreign company

with qualification of "Adequate".

75

20

10

0

Guarantee trusts on values

different from those provided in articles 131 and

156 of the LISF.

50

25

10

0

Pledge consisting of values different from those

provided in articles 131 and 156 of the

LISF.

50

25

10

0

Guarantee trusts on movable property.

50

25

10

0

Pledge consisting of movable property.

50

25

10

0

Proven solvency.

40

20

10

0

Ratification of signatures

35

15

0

0

Signature of joint obligor natural person

with a verified patrimonial relationship.

25

10

0

0

Pledge of book credits.

50

25

10

0

Current Account Agents

(13) In the concept of Agents, Current Account, operations in charge of or in favor of

natural or legal persons who intervene in the contracting or advice of contracts of

insurance or sureties, in accordance with what is provided in articles 91, 101 of the LISF, without including

premiums pending collection in possession 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 net balances

creditors newly determined will be registered.

Adjusters, current account

(16) The amount of operations in charge of or in favor of natural or legal persons that

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 they must transfer to the liability item, the amount of net creditor balances.

(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 net balances

creditors newly determined will be registered.

h)

Accounts Receivable (B-8)

(1) Institutions and Mutual Societies must observe the criteria indicated in NIF

C-3 "Accounts Receivable", with the following clarifications:

1)

For those accounts receivable that Institutions and Mutual Societies grant 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

unrecoverability.

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 accounts receivable,

showing in this way, the estimated recovery value of the enforceable rights;

2)

The estimation of accounts receivable that are not included in the previous paragraphs,

must be constituted by the total amount of the debt according to the following terms:

i.

At 60 natural days following their initial registration, when they correspond to non-

identified debtors, and

ii.

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

debtors.

3)

No estimation will be constituted for write-offs for unrecoverability or difficult collection in the following

cases:

i.

balances in favor of taxes;

ii.

creditable value added tax;

iii.

liquidating accounts;

iv.

guarantee deposits;

v.

dividends receivable on shares, and

vi.

debtors for interest on deposits received as guarantee for sureties.

4)

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 it 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 they must transfer to the account of

liability, the amount of 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;

5)

Registration of uncollectible accounts.- Insurance and surety institutions must register in

off-balance sheet accounts the amount of Uncollectible Credits that have been written off by the

institution, maintaining control by branches in those cases that so require.

i)

Reinsurers and Re-surety Institutions (B-9)

Objective and scope

(1) In this section, the accounting criteria that Institutions and Mutual Societies must be subject to

in reinsurance and re-surety operations that they carry out, in accordance with contracts, addenda or any other document that relate, by

which assets and liabilities must be registered and results affected derived from said

operations.

Applicable criteria in matters of reinsurance or re-surety.

Asset

Insurance and Surety Institutions

Insurance Institutions, current account (asset-liability)

(2) All items coming from reinsurance operations and that are made with

institutions from the country and from abroad must be registered in the item of Insurance Institutions and

Sureties, at the end of each month it will only present net debtor balances for reinsurer,

so they must transfer to the corresponding liability item, the amount of net creditor balances

for reinsurer. 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, in

its case, the amount of net creditor balances newly determined in said

item will be registered.

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

(3) Institutions and Mutual Societies that have ceded reinsurance or re-surety,

will register the amount of the commission receivable corresponding to the premium that has been retained by

concept of Reserve for Risks in Course or Sureties in Force, that they have carried out in accordance with

articles 34 fraction V, 35 fraction V and 54 of the General Law of Institutions and Mutual Societies

of Insurance in force until April 3, 2015; said commission will be enforceable upon the release of

the corresponding reserve. In reinsurance or re-surety operations taken, the

Accepting Institutions will register the amount of commissions payable relative to the premiums

that have been retained by concept of Reserve for Risks in Course, said commission will be enforceable 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 by reinsurance and re-surety taken

(5) In this item, the amount of reserves for premiums that have been retained by the

cedents, as well as premiums retained by foreign institutions in operations of

re-surety taken, will be registered.

Claims retained by reinsurance taken

(6) In this item, the amount of the reserve for claims that have been retained by the

cedents, in the terms of the respective contracts, will be registered.

Participation of Foreign Institutions or Reinsurers for Risks in Course

(7) In this item, the amount of the Participation of Institutions in the

Reserve for Risks in Course, for ceded or retroceded reinsurance, as well as the

participation in said reserve of foreign reinsurers that are registered in the

General Register of Foreign Reinsurers to take reinsurance and re-surety of the country,

determined in accordance with the applicable provisions, will be registered monthly.

(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 cession of risks to Insurance Institutions and/or foreign reinsurers registered in the General Register of Foreign Reinsurers to take reinsurance and re-surety of 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 of reinsurance operations corresponding to the Reserve for Pending Obligations to Comply for Claims Occurred and Not Reported and Adjustment Expenses

Assigned to Claims, as well as the expected amount of future obligations derived from

reported claims, will be registered in the corresponding sub-account, 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

exemplary but not limiting to items of the same nature.

Participation of reinsurers for salvage pending sale by reinsurance

taken and ceded (asset- liability)

(12) In this concept, the amount of salvage pending sale at the date

of the balance or valuation (asset) will be registered. The Institution that has ceded the direct insurance and retroceded the

taken reinsurance, will reflect the amount of salvage pending sale in favor of the

insurance and reinsurance institutions (liability).

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

(13) In this item, the amount to recover by retroceded reinsurance of the reinsurance

taken of claims paid in cash will be registered.

Participation of re-surety institutions for paid claims

(14) In this item, the amount of paid claims corresponding to the participation of institutions re-surety of the country and from

abroad for ceded and retroceded re-surety will be registered in the corresponding sub-account; and its cancellation will proceed when the corresponding funds of the respective paid claim are provisioned.

Participation of re-surety institutions in constituted liabilities

(15) The amount corresponding to the responsibilities of the sureties ceded and retroceded in

re-surety for which liability was constituted and are in charge of the institutions with

which the re-surety 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 re-surety coverage

(16) In this item, the amounts to recover for claims or claims, according to what is stipulated in the contracts of non-proportional reinsurance or re-surety

celebrated, will be registered.

Reinsurance and Re-surety Intermediaries (liability)

(17) The items that derive 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 Surety Reserve in

Force

(18) The Recoverable Amount of Reinsurance of the Surety Reserve in Force that corresponds to

the Institutions for the cession and retrocession of premiums that 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 re-surety 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

re-surety operations, will be those that are in force in the financial statements established by

this Commission, relative to the following concepts:

1)

Insurance Institutions current account

2)

Surety Institutions, current account

3)

Premiums retained by reinsurance and re-surety taken

4)

Claims retained by taken reinsurance

5)

Reinsurers' participation in salvage pending sale by taken reinsurance

6)

Surety companies' participation in paid claims

7)

Surety companies' participation in constituted liabilities

8)

Reinsurance companies' participation in non-proportional reinsurance and suretyship coverage

9)

Reinsurance and suretyship intermediaries

10)

Others related to receivable rights generated against reinsurance or surety companies.

(20) Institutions and Mutual Societies must perform, at least once a year, a detailed analysis of each and every item comprising the headings mentioned above, for the purposes of determining and accounting for estimates for write-offs of reinsurance or suretyship operations. They must consider, without being limited to, the following aspects:

1)

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

2)

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

3)

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

4)

Litigated balances owed by reinsurers;

5)

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

6)

That foreign reinsurers are registered in the General Registry of Foreign Reinsurers to take reinsurance and suretyship in 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 suretyship operations be carried out, and it is the responsibility of the external auditor to evaluate the reasonableness thereof.

(22) Therefore, the minimum criteria that Institutions, Mutual Societies, and external auditors will apply to determine the recording and review of estimates for write-offs of reinsurance or suretyship operations, in accordance with what is provided by Article 33 of the Commerce Code, by NIF C-3 - "Accounts Receivable" included in the Financial Information Standards, and by Chapter 22.2 of these Provisions regarding record books and auxiliary books, will be the following:

1)

Items comprising the balances of the headings mentioned in paragraph (19) items 1) to 6), in which the corresponding supporting documentation is not held, may not remain registered in assets. Such documentation is understood to be reinsurance or suretyship contracts, statements of account, balance confirmations, payment or collection from reinsurers or surety companies, and collection management;

2)

To quantify the amount of items comprising the balance of reinsurance or suretyship 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 gathered, the creation or increase of the corresponding estimate or, if applicable, their permanence within assets;

3)

Analyze the status of litigation regarding debts that reinsurers have with Institutions and Mutual Societies, evaluating from a legal standpoint the feasibility and expected percentage of recovery in order to record the corresponding estimate;

4)

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

5)

For balances owed by reinsurers not registered in the General Registry of Foreign Reinsurers to take reinsurance and suretyship in the country and for reinsurers that are in commercial bankruptcy, insolvency, or liquidation status, an estimate for doubtful receivables of 100% must be constituted, unless the Institutions and Mutual Societies have documentation allowing them to verify the constitution of a percentage different from that stated, and

6)

The possible existence of significant subsequent events must be considered as support for establishing 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 suretyship operations, Institutions will have the obligation to register the estimates made in the write-off accounts, which for this purpose are established in the minimum catalog 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 stated in these Provisions.

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

Preventive Estimation of Credit Risks of Foreign Reinsurers

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

Liabilities

Retained Deposits

Premiums retained by ceded reinsurance and suretyship

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

Reserve for claims retained by ceded reinsurance

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

Other Participations

Participation to surety companies for guarantees pending recovery

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

Participation to surety companies for recoveries, payable

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

Creditors for Premiums of Non-Proportional Reinsurance and Suretyship Coverage

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

Presentation Norms

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

Financial Reinsurance

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

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

1)

Assets

i.

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 effected due to non-compliance with the deadlines agreed upon in financial reinsurance contracts for the loan and interest, in accordance with what is stated in criterion B-8 Accounts Receivable.

2)

Liabilities

i.

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

ii.

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

3)

Results

i.

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

ii.

Interest derived from financial reinsurance contracts, correspond 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 for financial reinsurance contracts granted, correspond to the accrued interest derived from financial reinsurance loans granted, calculated according to the rate agreed upon in the contracts.

Recognition and Valuation Norms

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

Participation of Reinsurers or Surety Companies

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

For the purpose of ceded premiums:

a)

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

b)

When a risk already issued is ceded.

For the purposes of the participation of institutions and reinsurance companies for claims:

a)

On the same date that the claim or complaint originating it is accounted for.

b)

On the valuation date of the Reserve for Occurred and Not Reported Claims and Expenses Assigned to the Occurred and Not Reported Claim.

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

Retention of resources to reinsurers

(38) In reinsurance and suretyship operations taken, the retention of resources that cedents effect for the cession of responsibilities assumed in insurance policies and sureties to Institutions, its accounting recording must be recognized in the heading of Premiums retained by taken reinsurance and suretyship, in the month following the subscription of the insurance contracts, in accordance with the information provided by the cedent.

(39) Its valuation will be effected 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 headings of the current account of Institutions will be recognized under this concept when payment or collection for such concepts is accepted. In the case of the Reinsurance and Suretyship Intermediaries current account heading, only the brokerage that Institutions must pay to reinsurance intermediaries will be registered and recognized under this heading at the moment that the issuance of premiums taken from the risks or responsibilities assumed is recognized.

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

Advances of Commissions and Profit Participation of Reinsurance

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

(43) Likewise, an advance will be recognized for the amount of reinsurance commissions that exceeds the amount of the ceded premium corresponding to the same reinsurance contract and period of its validity, so it will be recognized at the moment that the cession of premiums is accounted for or in accordance with accrual based on the validity period of the contract. (by period, it will be understood 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, attending at all times 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 effected 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 suretyship coverage of reinsurance contracts must be recognized in liabilities and in result accounts in accordance with what is stated in NIF C-9 "Provisions, Contingencies, and Commitments" issued by CINIF.

Presentation Norms

(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 heading of financing obtained by financial reinsurance contracts.

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

j)

Permanent Investments (B-10)

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

(2) Likewise, for the case of permanent investments considered as associates, Institutions and Mutual Societies must adhere to NIF C-7 "Investments in associates, joint ventures, and other permanent investments" issued by CINIF, except for the provisions and definitions stated 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 character of a controlling entity must establish the necessary methodology to allow homologating the recording and valuation of operations carried out by subsidiaries, with the records of these Institutions and Mutual Societies, in order to properly carry out the consolidation process, for which they must take into account the following:

1)

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

2)

Real Estate.- Subsidiaries that are not Institutions or Mutual Societies or real estate companies and that have real estate, for consolidation purposes their valuation must adhere to the corresponding NIFs.

Likewise, balances corresponding to "estimate for impairment of long-term assets" must be included within the format stated in criterion C-1, in the heading of "Real Estate" and in results in the heading of investment valuation the balance corresponding to "impairment loss";

3)

Other Assets.- Subsidiaries that are not Institutions or Mutual Societies and that have other types of assets not stated 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 heading of "Various" or within the heading of "Other Assets", considering the nature of the asset, stating in a separate line the description of the assets that are incorporated into the minimum catalog, which for this purpose the Institution or Mutual Society will send to the Commission;

4)

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

5)

Other Liabilities.- Subsidiaries that are not Institutions or Mutual Societies and that have other types of liabilities not stated 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 heading of "Various" or within the heading of "Other Liabilities" considering the nature of the liability, stating in a separate line the description of the liabilities that are incorporated into the minimum catalog, which for this purpose the Institution or Mutual Society will send to the Commission.

(5) In the case of income and expenses registered by subsidiaries, distinct from the operations registered by Institutions and Mutual Societies, for consolidation purposes they must be integrated into other income and other expenses and grouped in the line item of operational 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 stated in NIF B-15 "Conversion of Foreign Currencies" must be observed, except for what is established in the criteria corresponding to "Estimation of assets and liabilities and off-balance sheet items" and "Availability and Temporary Investments", taking into consideration that Institutions and Mutual Societies carry out specialized operations. Likewise, instead of using the heading of "Changes", within equity the heading of "Accumulated Effect from Conversion" must be included in a separate line item.

k)

Technical Reserves (B-11)

Objective

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

Valuation

(2) Institutions and Mutual Societies will constitute and value technical reserves in conformity 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 register in their accounting the liabilities for

technical reserves and register the corresponding increase or decrease in the income statement items provided for this purpose in the minimum catalog referenced in Criterion C-1 of this Annex.

(4) Likewise, pursuant to 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, in accordance with the result obtained from the valuation.

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

Reserve for Risks in Course

(6) For the Reserve for Risks in Course of life, accident and health, and damage operations, Institutions must record in the item "Reserve for Risks in Course (Valuation at Agreed Technical Rate)" the result of the valuation of said reserve, for those policies in force during 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 referenced month (t). The recording of the aforementioned reserve shall be charged against income in the item "Net Increase to the Reserve for Risks in Course." Likewise, in the asset section, the recoverable reinsurance amounts must be recorded in the item "Participation of Institutions or Foreign Reinsurers for Risks in Course (Valuation at Agreed Technical Rate)" and the estimate for default, which must affect income in the concept of preventive penalties 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 Reserve for Risks in Course 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 will be determined. These variations will be recorded in the item named "Result in the Valuation of the Long-Term Reserve for Risks in Course due to Interest Rate Variations." Additionally, the corresponding effects on Recoverable Reinsurance Amounts will be recorded in the Asset item named "For Participation of Institutions or Foreign Reinsurers for Risks in Course (Variation at Agreed Technical Rate)."

The "Result in the Valuation of the Long-Term Reserve for Risks in Course due to Interest Rate Variations" must be determined solely by the change in the interest rates employed. Therefore, in the first valuation of the Reserve for Risks in Course of long-term insurance under these Provisions, a valuation must be carried out 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 must 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 previously valued before 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 from the referenced valuations is the effect produced solely by the change in the interest rates employed.

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

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

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

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

(12) Likewise, the deferred tax that, if applicable, is generated from the recording of variations due to the valuation of the Long-Term Reserve for Risks in Course in the item "Deferred Income Tax on the Long-Term Reserve for Risks in Course" will be considered.

Reserves for Obligations Pending Fulfillment

(13) In accordance with Article 303 of the LISF, Institutions and Mutual Societies must keep the record of claims, maturities, and received claims up to date. Likewise, reserves for obligations pending fulfillment will be valued in accordance with the methodology established for each of them in the respective provisions, recording the liability in the contractual obligations item, in the corresponding concept against income, and in the asset, the recoverable reinsurance amounts and the estimate for default, which must affect income in the concepts established for this purpose 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 catastrophic risk reserve, and those others determined by the Commission.

(14) Their recording must be effected 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 according to the concepts established in the minimum catalog referenced in Criterion C-1 of this Annex.

Reserve for Sureties in Force

(15) For the Reserve for Sureties in Force, the total corresponding liability must be recorded against income in the concept of net increase of the Reserve for Sureties in Force and in the asset, the recoverable retrocession amounts and the estimate for default, which must affect income in the concept of preventive penalties 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 must be recorded 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) According to the financial statement formats established in Series III. Criteria relative to the basic consolidated financial statements of the CUSF, the amounts of technical reserves that Institutions and Mutual Societies register must be presented in the Technical Reserves item of the Balance Sheet.

Specific Technical Reserves

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

1)
Constitution of Reserves.

i.
Number of journal voucher for reserve constitution;

ii.
Date of journal voucher for recording the constitution;

iii.
Number of official letter issued by CONDUSEF containing the respective order;

iv.
Date of the official letter 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 reserve cancellation;

ii.
Date of journal voucher for cancellation of reserves;

iii.
Number of official letter issued by CONDUSEF with which its constitution was ordered;

iv.
Date of the official letter 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) Journal vouchers with all the indicated data must be kept available in the offices of Institutions and Mutual Societies, in case the Commission requires the corresponding information and verification.

(20) The Insurance Institution or Mutual Society that has accounted for the specific technical reserves of each month, through a globalizing accounting voucher, must present to this Commission, within the information indicated in this Criterion, corresponding to the "Date of journal voucher for recording 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 Recording of Additional Benefits of Pension Insurance Derived from Social Security Laws

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

(22) In additional benefits to basic pensions granted directly by the Insurance Institution and which by their nature originate the constitution or increase of reserves for risks in course, these must be recorded from the moment the obligation to grant the corresponding benefits arises, and such recording will be charged against income in an item named "Net Increase of the Reserve for Risks in Course," 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 must record at the moment the payment obligation for additional benefits arises, the reserve for obligations pending fulfillment for occurred claims, charged against income in the item of claim incidence 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) These are represented by all 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 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 must be reported in a liability item, which will be decreased when its application against the items for premiums receivable is carried out.

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

(1)In off-balance sheet accounts, Institutions will record values that do not directly affect nor modify the items of the Balance Sheet and Income Statement, and serve for administrative control or reminder purposes, and will 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 over 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 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.- Will record the amount that the insurer administers for these concepts; independently of these records, they must carry out 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 must carry out the necessary ones to control this type of operations;

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

iv.
Trusts.- Amounts that the insurer or surety company receives for these concepts to administer, must also establish a special accounting for each contract they enter into, in which they will record the money and other assets, values, and rights entrusted to them, as well as the increases and decreases, due to 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 trustee, will be recognized in income in the period in which they are known, regardless of the moment in which any legal promotion is made for this purpose.

The recognition of income from the management of trusts must be made based on accrual. The accumulation of such accrued income must be suspended at the moment 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 full.

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

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 will be cumulative, to be settled at the end of each fiscal year.

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 Sureties Issued and for Caution Insurance.

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

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

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

iii.
Participation to Reinsurers of Recovery Guarantees. Guarantees granted by debtors for the issuance of policies and insurance certificates for reinsurance ceded and retroceded operations to other institutions. Must keep control of caution insurance contracts ceded from direct and those ceded 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 will proceed when the claim is paid, qualified as improper, or there is withdrawal. In case there is litigation in the claim, the registration must 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. Must have control over 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 to determine the exigibility of the policies, without until that moment being part of the litigation the surety company. Likewise, it corresponds to the registration of those claims in which the surety company has determined some deficiency 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 will be registered, in accordance with applicable administrative provisions. For the scenarios that affect the status of received claims in the surety company, applicable accounting reclassifications must be made in order to keep the information regarding said claims updated, as indicated in applicable administrative provisions.

Likewise, the amount of contingencies in litigation for sureties granted in public works contracts will be registered, as established in clause 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. Must have control over sureties ceded from direct and ceded from taken, as well as of the claims that the institution has verification that there is some litigation between the surety and the beneficiary, without until that moment the surety company being a participant in said litigation; and of the claims that are in the process of integration, as well as claims for amounts higher than the amount specified in the respective policy, in accordance with applicable administrative provisions.

7)
Group: Paid Claims

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

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

8)
Group: Cancelled Claims

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

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

10)
Group: Fiscal Loss to Amortize

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

11)
Group: Reserve to Constitute for Labor Obligations

i.
Reserve to Constitute for Labor Obligations.- Excess resulting from comparing

the net current liability with the projected net liability. In order to recognize the figures relating to each new period, the initial balance of this item must be cancelled at the end of each fiscal year and, at the same time, if applicable, the excess determined again will be recorded.

12)

Group: Capital Registration Accounts

i.

Updated Contributed Capital.- Capital contributions made by partners or shareholders and their update, and will be reduced by capital reductions made, in accordance with the provisions of the Income Tax Law;

ii.

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

iii.

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

13)

Group: Registration Accounts. Fiscal Registration

i.

Depreciable Asset.- For fiscal purposes, the pending depreciation portion of depreciable assets;

ii.

Intangible Assets.- For fiscal purposes, the pending amortization portion of intangible assets;

iii.

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

iv.

Fiscal Result.- Amount resulting from the combination of accumulative income, deductible items, non-accumulative items, and non-deductible items, and

v.

Net Distributable Fiscal Profit.- Corresponds to the net fiscal profit of each fiscal year, as well as dividends received by the institution from other commercial societies resident in Mexico, and is reduced by the amount of dividends or profits distributed in cash or goods, originating from previously registered profits, in accordance with the provisions of the Income Tax Law and for the purposes of the withholding taxes established in said Law.

14)

Group: Registration Accounts. Various

i.

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

ii.

Participation of Uncollectible Accounts by Reinsurance.- Amount of the participation of surety bonds paid that have been declared uncollectible due to ceded and retroceded reinsurance. There must be control over operations for ceded reinsurance of direct and ceded reinsurance of the taker;

iii.

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

iv.

Depositors 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 bond coverage or the current operating margin;

v.

Sancions Payable.- 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 Various Concepts.- All those concepts and operations that do not specifically appear in other order accounts, establishing the relevant classifications for adequate analysis, through the respective sub-accounts.

15)

Group: Derivative Product Operations

i.

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

ii.

Rights and Obligations for Future Operations.- Notional amount of future 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

i.

Assets to be Received as Guarantee for Loan.- Amount of assets or securities delivered as guarantee for the securities loan operation.

17)

Group: Guarantees Received for Derivatives

i.

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

18)

Group: Guarantees Received for Repo

i.

Guarantees Received for Repo.- Quotation cost of securities that are under guarantee 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) Order accounts must be presented at the end of the Balance Sheet for each Group established in this section.

m) Premiums (B-13)

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

Accounting 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 moment 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 reinsurance taken, 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 moment 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:

1)

From Direct:

i.

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

v.

Premiums of Direct Insurance by Subsidy.- Correspond to premiums that the Federal Government grants as a subsidy to support agricultural and animal insurance.

Less:

vi.

Returned Single Premiums of Direct Insurance.- Correspond to the return of premiums for inappropriate cases corresponding to pensions that are cancelled as a consequence of a rectification by social security institutes, IMSS and/or ISSSTE.

2)

From the Taker:

i.

First Year Premiums of Taken Reinsurance.- Correspond to first year premiums for taken reinsurance, of the life operation;

ii.

Renewal Premiums of Taken Reinsurance.- Correspond to renewal premiums for taken reinsurance, of the life operation;

iii.

Single Premiums of Taken Reinsurance.- Correspond to single payment premiums for taken reinsurance, of the life operation and of insurance contracts that have as a basis pension or survival plans derived from social security laws,

and

iv.

Premiums of Taken Reinsurance.- Correspond to premiums for taken reinsurance, of accident and health and damage operations.

Less:

v.

Returned Single Premiums of Taken Reinsurance.- Correspond to the return of premiums of the taker for inappropriate cases corresponding to pensions that are cancelled as a consequence of a rectification by 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 moment of the issuance of insurance contracts, in the percentages agreed in reinsurance contracts, in the case of ceded premiums of the taker, 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 premiums for proportional reinsurance and surety operations and facultative business in any of their placement forms, 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:

1)

Ceded from Direct

i.

Ceded First Year Premiums.- Correspond to direct insurance premiums, ceded in reinsurance, relating to the life operation;

ii.

Ceded Renewal Premiums.- Result from the renewal of direct insurance premiums, ceded in reinsurance, relating to the life operation;

iii.

Ceded Single Premiums.- Are single payment premiums of direct insurance, ceded in reinsurance, relating 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 direct insurance premiums, ceded in reinsurance, relating to accident and health and damage operations.

2)

Ceded from the Taker

i.

Retroceded First Year Premiums.- Correspond to taken reinsurance premiums, retroceded in reinsurance, relating to the life operation;

ii.

Retroceded Renewal Premiums.- Result from the renewal of taken reinsurance premiums, retroceded in reinsurance, relating to the life operation;

iii.

Retroceded Single Premiums.- Are single payment premiums of taken reinsurance, retroceded in reinsurance, relating 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 taken reinsurance premiums, retroceded in reinsurance, relating 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 moment of the subscription of the surety contract against the item of premiums receivable for issued surety bonds and in the case of taken re-surety, 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:

1)

Premiums of Direct

i.

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.

2)

Premiums of the Taker

i.

Premiums of Taken Re-surety.- Correspond to premiums for surety bonds from taken re-surety.

Less:

ii.

Returned Premiums by Taken 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 moment of the subscription of the surety contract and in the case of premiums retroceded in re-surety, 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:

1)

Ceded from Direct

i.

Premiums Ceded in Re-surety.- Correspond to premiums ceded to re-surers from the country and abroad by re-surety.

Less:

ii.

Returned Premiums by Ceded Re-surety.- Correspond to premiums for surety bonds returned in re-surety.

2)

Ceded from the Taker

i.

Premiums Retroceded in Re-surety.- Correspond to premiums of taken re-surety retroceded in re-surety.

Less:

ii.

Returned Premiums by Retroceded Re-surety.- Correspond to premiums for surety bonds returned from the taker by retroceded re-surety.

n)

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 registration of the acquisition cost for the intermediation of insurance and surety contracts, as well as commissions for ceded reinsurance and re-surety and other concepts, in accordance with what is established in articles 91, 92, 93, 94, 101, 102 and 361 section VII of the LISF and 1st 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 in accordance with articles 101 and 102 of the LISF, regardless of their payment form, the total amount of commissions must be recognized directly in results at the moment when insurance and surety contracts that give rise to them are registered, against the liability relative to commissions or compensations to accrue and, when premiums have been collected, its allocation in favor of the agents who intervened in the placement of the contracts, in the concepts established for such effect in the minimum catalog.

(3) Commissions for premiums and profit participation from taken reinsurance and re-surety 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 for premiums and profit participation from reinsurance and re-surety, at no time 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 by documentation that accredits their application and in compliance with NIF C-9 of the NIF, the corresponding provision must be constituted, in order to affect the results of the fiscal year to which its granting corresponds.

(5) The application of commissions in favor of insurance and surety policyholders will affect their results at the moment of the issuance of 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) Regarding the cost of non-proportional reinsurance and re-surety coverage, the recognition to results will be carried out monthly from the effective date of the reinsurance contract that gives rise to it in accordance with the cost of the coverage contract, independent of the payments agreed for the concept of minimum premium and deposit, recognition that must be reflected against the liability relative to Insurance Institutions, Current Account. Likewise, in the case that at the end of the coverage period, in accordance with issued premiums, claim frequency and other factors, an adjustment in the cost of coverage borne by Institutions and Mutual Societies is determined, in compliance with NIF C-9 "Provisions, contingencies and commitments" of the NIF, the corresponding provision must be constituted in order to affect the results of the fiscal year to which the indicated adjustment corresponds.

(7) Likewise, when non-proportional contracts are entered into that consider more than one line of business in their coverage, the costs associated with each of the protected lines 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 profit participation from reinsurance.

(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 entered into 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 such 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 costs 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 entities for services other than those reserved by the LISF to insurance agents, must be recognized directly in results at the moment when the insurance and surety contracts that give rise to them are registered, regardless of their form of payment.

Recovery of Acquisition Cost

(12) Commissions recovered for the concept of ceded premiums in reinsurance and/or re-surety, will be registered in their results at the moment when 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 are established for such effect in the minimum catalog.

(13) Commissions on premiums of taken reinsurance and retroceded re-surety, 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 re-surety contracts where the payment of profit participation from ceded reinsurance and re-surety has been agreed, the corresponding monthly provision of such participation against results must be made, which provision must be adjusted quarterly in accordance with the results obtained and the conditions agreed in the reinsurance contracts.

(15) In retroceded reinsurance and re-surety contracts, from the taker in which the payment of profit participation from ceded reinsurance and re-surety 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 registration of the claim cost and claims, due to risks and responsibilities assumed 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 claims, maturities and received claims, as well as recoveries for reinsurance and re-surety contracts they maintain, directly in results in the item of net claim cost, claims and other contractual obligations in the following sub-items which are indicated at minimum against the liability and asset established for such effect in the minimum catalog referred to in Criterion C-1 of this Annex.

Net Claim Cost, Claims and Other Contractual Obligations

Claim Frequency and Other Contractual Obligations

From Direct Insurance

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

1)

The Increase to the reserve for dividends and bonuses on policies, which will refer to the increases determined in accordance with actuarial procedures, in accordance with what is stated in article 342 section XII of the LISF;

2)

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

3)

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 fiscal year in accordance with the estimation of adjustment expenses assigned to the claim, in accordance with what is stated in article 217, section II, subsection c) of the LISF;

4)

Claims of Direct Insurance, correspond to direct insurance claims occurred and reported during the year, in the case of life operations only claims for death will be registered excluding additional benefits, likewise, 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 bonuses and overdue pension payments, as well as quotas and contributions to the individual account of the retirement insurance of the operations of pension insurance derived from social security laws;

5)

The claims for additional benefits of direct insurance shall refer to claims occurred for additional benefits in life insurance operations;

6)
The annuities of direct insurance correspond to the annuities of direct insurance, payable at a fixed term or as life annuities due during the year, in life insurance operations, which do not include operations of pension insurance derived from social security laws;

7)
The maturities of direct insurance shall refer to endowments and flexible insurance of direct insurance, matured during the year, in life insurance operations, which do not include operations of pension insurance derived from social security laws;

8)
The surrenders of direct insurance correspond to amounts paid to insured persons for surrender, for cancellation of loans due to policy lapse, graded, of direct insurance, as well as for flexible insurance and private pensions, in which operations of pension insurance derived from social security laws are not included;

9)
The claim adjustment expenses of direct insurance correspond to all expenditures paid for expenses incurred by direct insurance, derived from claim adjustments, as well as for expenses incurred in valuation centers;

10)
The salvage participation by ceded reinsurance refers to the amount of direct insurance salvages in favor of reinsuring institutions, 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 the IMSS or ISSSTE occasioned 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 Policyholder

(19) The cost of claim experience and maturities of insurance taken 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:

1)
The adjustment to the reserve for obligations pending to fulfill for claims occurred and not reported by insurance taken, corresponds to the gradual increase of the original reserve and the adjustment of the exercise according to the estimation of claims occurred and not reported by insurance taken, in accordance with what is stated in article 217, fraction II, inciso c) of the LISF;

2)
The adjustment to the reserve of adjustment expenses assigned to claims occurred and not reported by insurance taken, corresponds to the gradual increase of the initial reserve and the adjustment of the exercise according to the estimation of adjustment expenses assigned to the claim of insurance taken, in accordance with what is stated in article 217, fraction II, inciso c) of the LISF;

3)
The claims of reinsurance and suretyship claims by insurance and suretyship taken, refers to the claims of insurance taken occurred during the year. In life operations, only claims for death without additional benefits shall be recorded; as well as charged claims, both paid and for which a liability was constituted;

4)
The claims for additional benefits by insurance taken, shall refer to claims occurred for additional benefits in life insurance operations;

5)
The annuities of insurance taken correspond to the annuities of insurance taken, payable at a fixed term or as life annuities due during the year, in life insurance operations, in which operations of pension insurance derived from social security laws are not included;

6)
The maturities of insurance taken shall refer to endowments and flexible insurance of insurance taken, matured during the year, in life insurance operations, in which operations of pension insurance derived from social security laws are not included;

7)
The surrenders of insurance taken correspond to amounts paid to insured persons for surrender, for cancellation of loans due to policy lapse, graded, of insurance taken, as well as for flexible insurance and private pensions of insurance taken, in life insurance operations, in which operations of pension insurance derived from social security laws are not included;

8)
The claim adjustment expenses of insurance taken correspond to all expenditures paid for expenses incurred by insurance taken, derived from claim adjustments, as well as for expenses incurred in valuation centers, by insurance taken;

9)
The salvage participation by retroceded reinsurance, refers to the amount of salvages of insurance taken in favor of reinsuring 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 insurance taken correspond to the return of reserves to the IMSS or ISSSTE occasioned 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 insurance taken.

Recovery of claims, maturities and claims

By ceded reinsurance

(20) The recovery of the cost of claim experience and maturities by ceded reinsurance shall be integrated by the following concepts:

1)
The claims recovered by ceded reinsurance correspond to the claims recovered by ceded reinsurance, of direct insurance;

2)
The claims for additional benefits recovered by ceded reinsurance correspond to claims for additional benefits recovered by ceded reinsurance, of direct insurance. For pensions, the recording shall be made in accordance with the applicable administrative provisions;

3)
The life annuities recovered by ceded reinsurance represent the recoverable amounts of life annuities by ceded reinsurance, of direct insurance;

4)
The matured endowments recovered by ceded reinsurance represent the recoverable amounts of matured endowments by ceded reinsurance, of direct insurance;

5)
The surrenders recovered by ceded reinsurance represent the recoverable amounts of surrenders by ceded reinsurance, of direct insurance;

6)
The claim adjustment expenses recovered by ceded reinsurance represent the recoverable amounts for claim adjustment expenses, by ceded reinsurance, of direct insurance, and

7)
The salvages of direct insurance represent the amount of salvages obtained from direct insurance.

By insurance taken

(21) The recovery of the cost of claim experience and maturities by insurance taken shall be integrated by the following concepts:

1)
The claims recovered by retroceded reinsurance correspond to the claims recovered by retroceded reinsurance, of insurance taken;

2)
The claims for additional benefits recovered by retroceded reinsurance correspond to the claims for additional benefits recovered by retroceded reinsurance, of insurance taken;

3)
The life annuities recovered by reinsurance represent the recoverable amounts by retroceded reinsurance of insurance taken;

4)
The matured endowments recovered by retroceded reinsurance represent the recoverable amounts of matured endowments by retroceded reinsurance, of insurance taken;

5)
The surrenders recovered by retroceded reinsurance represent the recoverable amounts of surrenders by retroceded reinsurance, of insurance taken;

6)
The claim adjustment expenses recovered by retroceded reinsurance represent the recoverable amounts for claim adjustment expenses, by retroceded reinsurance, of insurance taken;

7)
The salvages of insurance taken represent the amounts of salvages obtained from insurance taken;

8)
The recoveries of claims by copayments represent the recoverable amounts at the expense of insured persons, in the accidents and diseases operation in the medical expense and health branches, and

9)
The recoveries of third-party claims represent the amounts of recoveries made from third parties, of direct insurance claims.

Recovered Claim Experience of Non-Proportional Reinsurance

By direct insurance

(22) The recovery of the cost of claim experience and maturities by insurance taken shall be recorded in results in the month in which the information is received, against the corresponding asset of Insurance Institutions, Current Account, and shall be integrated by the following concepts:

1)
The claims recovered from non-proportional reinsurance coverage represent the recoverable amounts by excess loss coverage of direct insurance for claims and additional benefits.

By insurance taken

(23) The claims recovered from non-proportional reinsurance coverage by direct insurance shall be integrated by the following concepts:

1)
The claims recovered from non-proportional reinsurance coverage by insurance taken represent the recoverable amounts by excess loss coverage of insurance taken for claims and additional benefits.

Net Cost of Claims

Claims

By direct sureties

(24) The concept of claims by direct sureties shall be integrated by the following concepts:

1)
The claims by direct sureties correspond to charged claims, both paid and over which a liability was constituted, in accordance with the applicable provisions, in relation to the procedure applicable to debtors by surety responsibilities;

2)
The participation of recoveries to suretying institutions corresponds to the recoverable amounts from suretying institutions for paid claims, by direct suretyship;

3)
The expenditures for payment of claims, by direct suretyship, refers to payments for claims proceeding for tax purposes, the amount relative to this concept shall correspond to what is registered in the concept of recoveries to be made on paid claims;

4)
The paid guaranteed claims, of ceded suretyship, represent the amounts of guaranteed responsibilities corresponding to ceded suretyship, for which the right to collect is recognized, in accordance with the applicable provisions, in relation to the procedure applicable to debtors by surety responsibilities, of direct suretyship, and

5)
The provision for payment of dividends on policies represents the provisions for payment of dividends in suretyship operations, provided that there is authorization from the National Commission of Insurance and Sureties for such effect.

By insurance taken

(25) The claims recovered from non-proportional reinsurance coverage by insurance taken shall be recorded in results in the month in which the information is received, against the corresponding asset of Insurance Institutions, Current Account, and shall be integrated by the following concepts:

1)
The claims of reinsurance and suretyship claims by insurance and suretyship taken, refers to the claims of insurance taken occurred during the year, by charged claims, both paid and for which a liability was constituted;

2)
The participation of claims to suretying institutions by insurance taken, corresponds to the recoverable amounts from suretying institutions for paid claims, by insurance taken;

3)
The expenditures for payment of claims, by insurance taken, refers to payments for claims proceeding for tax purposes by insurance taken, the amount relative to this concept shall correspond to what is registered in the concept of recoveries to be made on paid claims, by insurance taken, and

4)
The paid guaranteed claims, of insurance taken, represent the amounts of guaranteed responsibilities corresponding to retroceded suretyship, for which the right to collect is recognized, in accordance with the applicable provisions, in relation to the procedure applicable to debtors by surety responsibilities, of insurance taken.

Recovery of claims

By ceded suretyship

(26) The concept of recovery of claims by ceded suretyship shall be integrated by the following concepts:

1)
Participation of claims to suretying institutions, represent the participation of claims at the charge of other institutions derived from ceded suretyship;

2)
The recovery, corresponds to the amounts of recoveries made of charged claims in previous years, by direct sureties;

3)
The release of the surety contingency reserves 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;

4)
The recoveries to be made on paid claims, by direct suretyship, refers to payments of claims proceeding, for tax purposes, the amount registered in this concept shall correspond to what is registered in the concept of expenditures for payment of claims, and

5)
The paid guaranteed claims, by direct sureties, correspond to the amounts of guaranteed responsibilities corresponding to direct sureties, for which the right to collect is recognized, in accordance with the criteria of this Circular, regarding debtors by surety responsibilities.

By insurance taken

(27) The claims by insurance taken 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:

1)
The participation of claims to suretying institutions, by insurance taken, represent the participation of claims at the charge of other institutions derived from retroceded suretyship;

2)
The recovery, by insurance taken, corresponds to the amounts of recoveries made of charged claims in previous years, by insurance taken;

3)
The disposal of surety reserves in force and contingency, by insurance taken, 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 articles 220 and 223 of the LISF;

4)
The recoveries to be made on paid claims, by insurance taken, refers to payments of claims proceeding, for tax purposes, the amount registered in this concept shall correspond to what is registered in the concept of expenditures for payment of claims, by insurance taken, and

5)
The paid guaranteed claims, by insurance taken, correspond to the amounts of guaranteed responsibilities corresponding to sureties of insurance taken, for which the right to collect is recognized, in accordance with the criteria of this Circular, regarding debtors by surety responsibilities.

Recovered Claims from Non-Proportional Reinsurance and Suretyship

(28) The recovery of claims by insurance taken 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:

1)
The recovery of institutions by non-proportional suretyship coverage, by direct suretyship, corresponds to the amounts of recoveries derived from non-proportional suretyship contracts celebrated by the institutions, and

2)
The recovery of institutions by non-proportional suretyship coverage, by insurance taken, corresponds to the amounts of recoveries derived from non-proportional suretyship contracts, by insurance taken, celebrated by the Institutions.

Presentation

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

o)
Adjudicated Assets (B-15)

Objective and scope

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

Recognition standards

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

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

Valuation standards

(4) Assets acquired through judicial adjudication shall be registered on the date the approving order of the auction becomes final by which the adjudication was decreed.

(5) Assets that have been received through dation in payment shall be registered, on their part, on the date the dation deed is signed, or on the date the transmission of the property of the asset was formalized.

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

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

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

(9) At the time of the sale of 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 adjudicated asset for use

(10) When opting to transfer adjudicated assets for use of the entity, such transfer may be made at its adjudication value in the Balance Sheet item corresponding to it according to the asset in question, provided that the fact 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 by adjudication of assets shall be presented in the item of other income (expenses) of the operation.

p)
Derivative financial instruments and hedging operations (B-16)

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

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

1)
The support staff of the Institution or Mutual Society shall reconcile daily the confirmations and account statements issued by intermediaries, with the records of the operators of these products, in order to validate the information that will be accounted for; likewise, they must have auxiliary records in order to clearly identify Derivative Financial Operations;

2)
The support staff shall verify their records daily with those of the operators and compare both databases with the accounting;

3)
The operations described above that 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 provided in the last paragraph of this criterion;

4)
The settlements required in the operation with derivative products shall be carried out by the support staff under authorized instructions and verified amounts, and

5)
For the recording operations of derivatives, a detailed control shall be kept through auxiliaries for each of the concepts that affect them.

q)
Effects of inflation (B-17)

(1) Institutions and Mutual Societies must adhere to the guidelines established in NIF B-10, provided they do not conflict with the accounting criteria set forth in the following paragraphs.

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

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

(4) The main non-monetary items or accounts are summarized below: (i) Real Estate, accumulated depreciation, and depreciation of the period; (ii) Reserve for Risks in Course;

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

(v) Contingency Reserve; (vi) Participation of Surety Reinsurers in the Contingency Reserve; (vii) Reserves for Labor Obligations, and (viii) Equity Capital.

1)

Real Estate

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

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

2)

Depreciation

(7) The determination of the depreciation of the year, 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 consistent, that is, the rates, procedures, and probable useful lives will be the same.

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

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

3)

Technical Reserves and Reserves for Labor Obligations

i.

Balance Sheet Accounts

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

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

ii.

Income Statement Accounts

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

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

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

4)

Equity Capital

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

5)

Accounting Record

(16) The accounting record of the effects of inflation in 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 historical figures trial balance, to generate a reexpressed figures trial balance.

r)

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 what is claimed.

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

(3) In the event that the claimed amount increases to such an extent that it exceeds the secured amount according to the respective policy, what is established in paragraphs 10 and 11 of this Criterion must be observed.

(4) Any claim that does not meet the integration requirements specified in fraction VIII of provision 4.2.8 of this Circular, will be registered preventively in the item "Contingent Claims", in the sub-item "Claims Pending Integration", strictly adhering to what is indicated in the first paragraph of paragraph 3 of this Criterion. Claims registered in the sub-item "Claims Pending Integration" will not count for the calculation of the solvency capital requirement.

(5) In accordance with the accounting record indicated in this Provision, Institutions operating Sureties must 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 not done within said term, the claim will be considered integrated. Likewise, if Institutions operating Sureties do not make use of the right referred to in this paragraph, the beneficiary's claim will be considered integrated, and the previously made record in the item "Contingent Claims", sub-item "Claims Pending Integration" must be reclassified, transferring it to the item "Claims Received".

(7) In the terms of the previous paragraph, when the claim is duly integrated, Institutions operating Sureties will have a period of up to 30 natural days, counted from the date the claim was integrated, to proceed with its payment or, in its case, to communicate in writing to the beneficiary the reasons, causes, or motives for its total or partial impropriety.

(8) The deadlines indicated in this provision must be considered for the purpose of the constitution of liabilities charged to the results of Institutions operating Sureties for the claims received, in accordance with what is indicated in article 298 of the LISF and Criterion B-7 Debtors, "Debtors for Surety Responsibilities". The recording of the aforementioned liability must be made independently of the permanence of the record of the received claim in order accounts.

(9) When due to judicial or extrajudicial causes, Institutions operating Sureties have knowledge and certainty of the enforceability of payment of amounts exceeding the secured amount, they must also register the aforementioned liability for the corresponding excess amount.

(10) In order to keep control and follow-up of received claims at all times, in addition to the accounting record of the same, Institutions operating Sureties must have the claim files, which must contain the minimum data expressed in fraction VIII of provision 4.2.8 of this Circular, and the result of the respective evaluation, as well as the payment dates or declaration of impropriety, as appropriate, 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 impropriety or partial propriety of the received claims, such circumstances must, likewise, be 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) For the case of received claims determined as proper, Institutions operating Sureties must make the payment to the beneficiary within the period established in fraction I of article 279 of the LISF. Once the respective payment is made, the record of the order account "Claims Received" will be cancelled, adhering to Criterion B-7 Debtors, "Debtors for Surety Responsibilities" for the recording of paid claims.

(13) If Institutions operating Sureties resolve the received claim as improper, they must cancel the record in the respective order accounts, and in this case, must have at least the receipt or stamp of received from the beneficiary of the document where the Institution communicates to them the reasons, causes, or motives for its impropriety.

(14) Claims that during the exercise are determined as totally or partially improper, in the terms of the previous paragraph, must be registered in the order account "Claims Cancelled of the Exercise" and the corresponding cancellation for the participation of reinsurers in the item "Participation of Cancelled Claims".

(15) Institutions operating Sureties may determine the partial propriety of the received claim, and must have the elements that justify the amount determined as proper. In this case, they must make the payment to the beneficiary in accordance with what is established by fraction II of article 279 of the LISF, cancelling the record in the order accounts of received claims for the amount covered to the beneficiary. As for the remainder, it must remain in the order accounts of received claims, having Institutions operating Sureties to have at least the receipt or stamp of received of the payment made to the beneficiary in order to cancel said amount.

(16) If within 45 business days counted from the receipt of the claims, the Institution operating Sureties has not notified the beneficiary of its impropriety in accordance with what is provided in article 279 of the LISF, it must create a liability charged to results for the claimed amount. The aforementioned record must also be made at the moment of determining the propriety of payment of the sureties, except in those cases that are in litigation. Regardless of the previous procedure, the Commission may order the constitution of liabilities charged to results, in those claims that so require;

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

1)

The amount registered in the order account "Claims Received" must not be modified, until the arbitration or lawsuit is resolved by a resolution that has caused res judicata;

2)

If the arbitral or judicial resolution on the impropriety or partial propriety is against the Institutions operating Sureties, they must make the payment in accordance with what is provided in article 279 of the LISF, as well as what is provided in Criterion B-7 "Debtors", in the section of Debtors for Surety Responsibilities, and

3)

In the case of resolution in favor of Institutions operating Sureties on the dismissal of improper claims, the total amount registered in the order account "Claims Received" must be cancelled. In the case of partial propriety, in addition to this cancellation, Institutions operating Sureties will make the respective payment in accordance with what is established in paragraph 5 of this Criterion.

(18) Regarding claims made through judicial or administrative authorities, they must be registered accounting 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.

1)

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.

2)

Surety Institutions must send to the Commission, in Format II indicated in this provision, a detailed report of the highest amount claims against the institution, in descending order of amount, which together represent at least 80% of the balance of the item Received Claims.

3)

In order for Surety Institutions to comply with the electronic delivery of Formats I and II of this provision, the following instructions for their completion are made known:

I.

The 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 its 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 keys of types of guarantees described in Format III of this provision, will be noted, and in the "Amount" column, the global sum of said guarantees.

IV.

The initial balance registered in the column named "Balance of claims of the month immediately preceding the one being reported (1)", must coincide with the balance reported in the immediately preceding month in the column of "Balance of claims of the month being reported (1+2-3)", in order for these surety institutions to inform this Commission, in its case, the causes that originated the decrease of 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 are not part of the previous month's report, must be presented in the column of "Increases of claims (1)", notwithstanding that in the records of these surety institutions they report balances in the immediately preceding month, so they must not use the referred column "Balance of claims of the month immediately preceding the one being reported (1)", when it comes to claims that are being registered as increases in the report of the month in question.

V.

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 AT _____ OF ____________________ 20__

SUBACCOUNT / Name of Surety

Balance

claims

month immediately

preceding the one

being reported (1)

Movements of claims

received in the month

Balance

claims

of the month that

is 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 AT _____ OF ____________________ of 20__

SUB-ITEM/Name of Surety

No.

Claim

Date

Claim dd/

mm/yyyy

Surety No.

Name of

Beneficiary

RAMO

SUB-

RAMO

Amount of

responsibility

of the surety

Recovery

Guarantees

Balance

claims

month

immediately

preceding the one

being reported (1)

Movements of received claims in the

month

Balance

claims

of the month

being reported

(1+2-3)

Amount

Type *

Increases of

claims

(2)

Decreases of

claims

(3)

Concept

of the decrease

(I, P, D,T, S,

O)

RECEIVED CLAIMS

Receipt of Claims. Of the

Exercise, for Direct Sureties

(Detail of each of the

claims)

Subtotal

Receipt of Claims. Of Previous

Years, for Direct Sureties

(Detail of each of the

claims)

Subtotal

Receipt of Claims. Of the

Exercise, for Reinsurance Taken

from the Country

(Detail of each of the

claims)

Subtotal

Receipt of Claims. Of Previous

Years, for Reinsurance

Taken from the Country

(Detail of each of the

claims)

Subtotal

Receipt of Claims. Of the

Exercise, for Reinsurance Taken

from Abroad

(Detail of each of the

claims)

Subtotal

Receipt of Claims. Of Previous

Years, for Reinsurance

Taken from Abroad

(Detail of each of the

claims)

Subtotal

Claims in Litigation. Of the Exercise,

for Direct Sureties

(Detail of each of the

claims)

Subtotal

Claims in Litigation. Of Previous

Years, for Direct Sureties

(Detail of each of the

claims)

Subtotal

Claims in Litigation. Of the Exercise,

for Reinsurance Taken from the Country.

(Detail of each of the

claims)

Subtotal

Claims in Litigation. Of Previous

Years, for Reinsurance

Taken from the Country

(Detail of each of the

claims)

Subtotal

Claims in Litigation. Of the Exercise,

for Reinsurance Taken from

Abroad

(Detail of each of the

claims)

Subtotal

Claims in Litigation. Of Previous

Years, for Reinsurance from

Abroad

(Detail of each of the

claims)

Subtotal

TOTAL

• Type of guarantees: Indicate the key corresponding to the type of guarantee, according to the attached relationship.

Concepts of decrease of claims:

I = Claim declared improper by the surety institution,

P = Claim paid,

D = Withdrawal by the beneficiary,

T = Transfer between sub-items,

S = Cancellation of claims by resolution issued by competent authority in favor of the surety, and

O= Other causes

In the case of decreases of claims originated by multiple concepts, the various letters corresponding to said concepts must be noted.

FORMAT III

NATIONAL INSURANCE AND SURETY COMMISSION

DETAILED RECEIVED CLAIMS

TYPES OF GUARANTEES

KEY

CONCEPT

A

Pledge consisting of cash, securities issued or guaranteed by the Federal Government or securities issued by credit institutions with "Superior or Excellent" rating.

A1

Risk coverage for compliance that development banks grant directly or through a trust.

B

Pledge consisting of securities issued by credit institutions with "Good and Adequate" rating.

C

Pledge consisting of securities issued by credit institutions with a rating lower than

"Adequate".

D

Pledge consisting of deposits in credit institutions.

E

Pledge consisting of loans and credits in credit institutions.

F

Letter of credit from Mexican Credit Institutions.

G

"Stand By" Letter of Credit or Letter of credit from Foreign Credit Institutions with

"Superior or Excellent" rating.

H

"Stand By" Letter of Credit or Letter of credit from Foreign Credit Institutions with

qualification " Good or Adequate " .

I

" Stand By " Letter of Credit or Letter of Credit of Foreign Credit Institutions with

qualification lower than " Adequate " .

J

Counter-guarantee of Mexican Surety Institutions or of Institutions from Abroad

that are registered with the Ministry of Finance and Public Credit in the " General Register of

Foreign Reinsurers to take Reinsurance and Counter-guarantee from the Country".

K

Joint Management of Bank Accounts.

L

Trusts celebrated on securities approved by the National Banking and Securities Commission as investment objects.

M

Pledge consisting of securities approved as investment objects by the National Banking and Securities Commission.

N

Mortgage.

Ñ

Encumbrance as Guarantee.

O

Trusts celebrated on real estate given as guarantee.

P

Indemnity Contract of a foreign company with qualification of " Good, Excellent or

Superior.

Q

Joint obligation of a Mexican company rated by an international rating agency.

R

Trusts celebrated on other securities not approved by the National Banking and Securities Commission.

S

Pledge consisting of other securities not approved by the National Banking and Securities Commission.

T

Trusts celebrated on movable property.

U

Pledge consisting of movable property.

V

Proven solvency.

W

Ratification of signatures.

X

Signature of joint obligor, natural person, with verified patrimonial relationship.

(20) For claims related to sureties subject to resolution due to controversy

raised between the principal and the respective beneficiary, whether they are fidelity sureties, judicial (criminal and

non-criminal), administrative (tax and non-tax), or Credit sureties, they shall be registered accounting-wise in the

item " Contingent Claims " , identifying them as " Contingencies in Litigation " and the

applicable ones as " Contingencies in Litigation in Public Works Contracts " , according to the minimum catalog,

provided that the Institution has knowledge and proof of litigation between the parties in

controversy.

(21) When the amount originally claimed as principal sum, according to subsection k) fraction VIII of provision 4.2.8. of this Circular, increases as a consequence of

judicial or extrajudicial actions carried out by the beneficiary and that this amount

exceeds the responsibility assumed in the corresponding policy, the excess over the amount

covered by the surety shall be accounted for in the account " Contingent Claims " , under the

sub-account " Contingencies for Claims Higher than the Bonded Amount " , regardless of

the registration made according to subsection 2 of this Criterion, and the records must be preserved

until the total termination of the claim process filed.

(22) It shall be the obligation of Institutions operating Sureties to inform the

beneficiaries, through the clauses of their policies and contracts in the part related to

claims, the minimum requirements indicated in subsection k) fraction VIII of provision 4.2.8.

of this Circular, in order for the claim writings to be duly

presented before the Surety Institutions.

s)

Salvages (B-19)

Objective and scope

(1) This section contains the specific rules relative to the recognition, valuation,

presentation and disclosure in the financial statements of salvages, understood as those,

the goods that, after an accident occurs, report an estimated recovery value.

Registration, valuation and presentation rules

(2) The good or goods that are recovered or acquired by Insurance Institutions by concept of

salvages whose value is determined by an appraiser in the matter in question, or in its

case, by the price agreed between the Insurance Institution and the Insured or the beneficiary, shall

be registered as an asset in the item of inventory of salvages to be realized against results

by operation and branch corresponding in the item of recovery of accidents, maturities and

claims, according to the minimum catalog of this Circular, at the moment when the Institution

knows of the existence of the salvage, has the corresponding contractual evidence or, in its

case, when the salvage is recovered on a date subsequent to the settlement according to the value

determined by the appraiser in the matter in question.

(3) In case that it is about salvages pending to be realized by reinsurance taken, they shall

be registered in the asset in the item of salvages pending for sale by reinsurance taken

against results in the sub-item of recovery of accidents, maturities and claims,

according to the minimum catalog, of this Annex;

(4) Likewise, when the direct insurance has been ceded and the reinsurance taken has been retroceded, the

amounts of the salvages pending for sale in favor of Insurance Institutions and

reinsurers, the liability by concept of salvages pending for sale

against results in the sub-item of accidents, maturities and claims shall be registered, according to the minimum catalog

of this Annex.

t)

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

(1) In this section the criterion relative to the proration of income and expenses is defined.

(2) For the purposes of the registration of income and expense operations that are not of direct

allocation, it will be made in the sub-item determined by the Institution, which will not be part of the

information that is delivered to the Commission, which with the application of the proration procedures, will affect the corresponding sub-items, therefore, at the close of each month the balance

of the sub-item that has been designated must be " zero " .

(3) For the control and verification of the applications that are made according to what is described in the

paragraph above, they must adhere to the Provisions contained in Chapter 22.3 of these

Provisions.

u)

Analogous and related operations (B-21)

Objective

(1) This section contains the criteria for accounting registration, presentation and disclosure in the

financial statements of analogous and related operations carried out by Institutions and

Mutual Societies.

Registration and presentation rules

(2) The income obtained and the expenses incurred for the provision of services by operations

analogous and related, must be registered in the concept of expenses for analogous and

related services, which for such effect are established in the minimum catalog of this provision.

(3) For this reason, the concepts of income from the administration of related services, income

from related services and the expenses incurred for the provision of analogous and related services,

must be part of the item of Results of Analogous and Related Operations.

(4) In relation to the administration of losses, expenses for accidents occurred and

adjustment expenses borne by third parties that correspond to contracts celebrated in the terms

of article 118 fraction XXVI, of the LISF, as well as the recovery of the same, in the item of

Net Operation Expenses.

v)

Of the accounting registration of premiums of short-term endowment Insurance plans and plans

of flexible insurance (B-22)

(1) The premiums of short-term endowment plans, shall be registered provided that it is an income

coming from a contribution of the insured and, at its maturity, in case of remaining within

the Institution or Mutual Society, it will be in a management fund for the handling of

dividends and maturities, and not as a premium through the purchase of a new short-term endowment,

whatever the term, and

(2) In flexible plans, the contributions that the insureds make to

their policies shall be registered as premium and not the partial withdrawals that are taken from the reserve for the payment of the monthly temporary insurance.

w)

Leases (B-23)

(1) For the purposes of articles 35, fraction XV, 300, 304 and 305 of the LISF:

(2) Institutions and Mutual Societies that carry out financial lease operations

must adhere to what is indicated in Bulletin D-5 " Leases " , considering the following:

1)

When it is about real estate lease contracts, these can only be considered

as capitalizable when they meet all the requirements indicated in Bulletin D-5

" Leases " .

2)

The real estate acquired in capitalizable lease, must be valued in compliance with the

procedures made known by the Commission in Criterion B-6 " Real Estate " of this

Annex,

Accounting for the lessor

3)

For the amount of amortizations that have not been settled within a period of 30 days

natural following the date of maturity of the payment, the lessor must create the

corresponding estimate, suspending the accumulation of rents, keeping its control in

order accounts in the item of other registration accounts.

4)

The lessor must present in the balance sheet the receivable account in the item of other

receivables, and the income from lease in the item of other income (expenses) of

the operation in the income statement.

Accounting for the lessee

5)

For presentation purposes, the lessee must include in the balance sheet the liability

for lease as part of the item of various creditors and other accounts payable, and

in the income statement the lease expense in the item of administrative and

operating expenses.

When the lessee opts to participate in the sale price of the goods to a third party, the

institution will recognize the income that corresponds to it at the time of the sale against the

results of the exercise as other income (expenses) of the operation.

Subleases and similar transactions

Accounting for the original lessee

6)

The effects on the results of the exercise referred to in paragraph 76 of Bulletin D-5,

relative to the termination of the original lease, will be presented in the item of other

income (expenses) of the operation in the income statement.

x)

Co-insurance Operations (B-24)

Objective

(1) This criterion establishes the accounting treatment to which Institutions and

Mutual Societies must be subject, in the Co-insurance operations they carry out.

Registration rules

(2) Co-insurance operations by the Leading Co-insurer must be registered on the

same day they are effected. Likewise, operations on behalf of the other co-insurer

must be registered by the leading co-insurer in the asset and liability accounts

corresponding, having to have the necessary controls on the issuance, collection,

commissions, accidents, adjustment expenses, salvages and other concepts, which will serve as

the basis for the preparation of co-insurance account statements that are sent monthly to the other

co-insurer, in order for the latter to register its operations in the corresponding items

in the month it receives this information, such records must be made by operation and

branch in attention to what is stated in article 25 of the LISF.

(3) The Leading Co-insurer for the purpose of registering these operations must identify within

the asset in the item of Debtors by Co-insurance operations, the Premium in Co-insurance,

Estimates for recovery from co-insurers for pending accidents and adjustment expenses, and

in the liability items the commissions to accrue, the reserves for pending obligations to be met for accidents, benefits, guaranteed values or dividends for operations of

Co-insurance, salvages in Co-insurance, third-party recoveries, as well as register the

income and expenses for administration in Co-insurance in their result items, according to the

nature of the same, balances that must coincide with the Co-insurance Account Statement at the

end of each month, which in turn must coincide with the balances reported in the item of Creditors

by Co-insurance operations.

(4) The Leading Co-insurer must consider that within the asset of Debtors by Co-insurance operations,

the premiums in Co-insurance are integrated by premiums, surcharges, taxes and rights

on policies, which are registered against premiums in Co-insurance in the item of Creditors by

Co-insurance operations, likewise, they must register the liability by concept of the commissions

to accrue in favor of the agents who have participated in the intermediation of the insurance policies

borne by the co-insurer, decreasing the Commissions by Co-insurance operations from the

item of Creditors by Co-insurance operations.

(5) Likewise, within the concepts of assets in the item of Debtors by Co-insurance operations

Various, it must integrate the concept of Estimates for recovery of

co-insurers for pending accidents and adjustment expenses, in which the accidents

estimated and adjustment expenses to the accident in Co-insurance pending adjustment or settlement, against the

item of reserves for pending obligations to be met for accidents, benefits, guaranteed

values or dividends and adjustment expenses to the accident.

(6) Finally, the expenses incurred by the Leading Co-insurer on behalf of the other co-insurer,

must register the amount borne by the co-insurer in the item of Debtors by Co-insurance operations,

derived from the outflow of resources to meet such expenditures.

(7) In relation to the income from the administration of Co-insurance operations, they shall

register the balance borne by the co-insurer in the item of Debtors by Co-insurance operations,

affecting their results in the corresponding items according to the nature of the income.

(8) The recovery of accidents by payments borne by third parties, carried out by the Leading Co-insurer

must be registered at the moment it has the documentation that accredits the right

of collection in the item of accounts receivable, likewise it must register in the item of

Creditors by Co-insurance operations the rights in favor of the other co-insurer, having to

affect its results only by the amount of its participation. Likewise the

Non-Leading Co-insurer must register in the item of Creditors by Co-insurance operations,

the expenses for the administration of the operations in Co-insurance in favor of the Leading Co-insurer,

having to affect the result items according to the nature of the expenses.

Presentation criteria

(9) As a general rule, Co-insurance operations must be presented in the Balance

Sheet in the items of Debtors and Creditors by Co-insurance operations, likewise, the

balances of accounts receivable from third parties for accidents, Inventory of salvages to

be realized, the reserve for pending obligations to be met for accidents and the adjustment expenses by

accidents will be presented net of Co-insurance.

y)

Surety Insurance (B-25)

Debtors by Surety Insurance Accidents

(1) Institutions operating Surety Insurance must register in their accounting all the

operations they carry out, whatever their origin, among which stands out the registration of

debtors by surety insurance accidents, which in accordance with the minimum catalog to

which Criterion C-1 of this Annex refers, is considered as an asset.

(2) The right of collection that is registered at the moment when the institution makes the payment of the

accident to the beneficiaries of the surety insurance cannot be higher than the amount paid and the

accessories that correspond to it;

(3) The said debtor by surety insurance accidents, must be enforceable within a period that does not

exceed 90 natural days from its initial registration, therefore after said period has passed,

they must create an estimate for write-offs for 100% of the said right of collection, in the

case that the institutions know that the probability of recovery of said asset will be

lower than 100% from its initial recognition, it must register the estimate for write-offs that

corresponds.

Recovery of Guarantees of Surety Insurance

(4) At the moment when the insurance institution adjudicates the recovery guarantees,

it must cancel the right of collection registered in the item of debtors by surety insurance accidents

and register the guarantees in the asset corresponding to its fair value according to the

Fair Value Determination Financial Information Standard B-17 " Determination of Fair Value " , value that cannot be

higher than the payment of the accident, and the accessories that correspond to it. In case of having

guarantees, these deteriorate in different proportions according to the type of recovery guarantee

that had been obtained at the time. For the purpose of registering the recovery of

guarantees for the payment of this type of insurance, which Institutions must carry out,

they will be subject to the following:

(5) For the amount paid for accidents that Institutions operating Surety Insurance make with own resources, and

there are recovery guarantees that meet the requirements that establishes for each of them

Chapter 16.3 of these Provisions, the provisions of article 27, fraction XII of the LISF will apply,

therefore this amount must be registered in its 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 order accounts.

(6) The expenses incurred for the concept of recovery on the paid accidents, must be

registered directly to results, as well as the income that is obtained on them at the time;

(7) In order to carry out the registration of the recovery of guarantees for the payment of accidents

of surety insurance, in the corresponding file the receipts of the

amounts paid, as well as of the recovery guarantees that are available at that date, will be included,

indicating their value;

(8) The registration of the guarantees, once adjudicated, will remain registered in the asset for up to

a period of four years, according to the type of guarantee in question, counted from the date of

payment, attending to the quality of the guarantee, temporality and percentages indicated in the table

attached to this criterion. To this effect, the asset must be canceled once the said period has concluded and

take it to the item of uncollectible accounts.

(9) The accounting in uncollectible accounts and the cancellation of the asset, can be carried out in an

anticipatory manner when the Institution operating Surety Insurance has elements that

accredit its registration.

(10) In those paid accidents that have reinsurance, whether taken or ceded with

Insurance Institutions or Institutions from Abroad, the corresponding part will be registered in the

specific items for these operations, according to the minimum catalog to which Criterion C-1 of this Annex refers, applying in what is pertinent the Provisions of this Chapter.

For such effect, the Ceding Institution must inform within a period that will not exceed 20 days

business, counted from the date of accounting, to those Institutions that ceded to them in

reinsurance;

(11) At the close of the exercise, Institutions operating Surety Insurance must inform their

Board of Directors the amounts registered in results for the payment of Surety Insurance

, as well as for the cancellation of the rights of collection.

(12) For the purposes of the determination of the recognition percentages of the rights of

collection for Surety Insurance, it must use those cited in the criterion " Debtors (B-7) " of this

Annex, corresponding to the debtors by surety responsibilities, with the exception of the Counter-guarantee of Institutions or of Institutions from Abroad that are registered in the RGRE

with qualification of " Good " or " Adequate " , or of persons who comply with what is established in the

article 188 of the LISF, notwithstanding it may replace said guarantee with any of the following

options:

TYPE OF GUARANTEE

PERMANENCE IN THE ASSET

1st year

2nd year

3rd year

4th year

Surety to cover the

surety insurance

100

0

0

0

Surety insurance to cover

another surety insurance

(Counter-insurance)

100

0

0

0

Provision of Funds Received from Individuals for surety insurance

(13) The amounts that the Institution receives by concept of funds from individuals for the payment of

possible accidents, must be recognized in the sub-item " Provisions of Funds Received from

Individuals " according to the minimum catalog to which Criterion C-1 of this Annex refers,

for the amount of cash received, which has been established in the corresponding contracts.

(14) The accrual of interest pending collection on deposits by concept of

funds for the payment of accidents received from individuals, must be recognized in the Result

Integral of Financing against the sub-item Debtors by Interest on Deposits Received

as Guarantee. At the moment when the accrued interest is collected, the balance in the sub-item cited above must be canceled, and at the same time, it will register the cancellation of the balance

corresponding in the Result Integral of Financing generating a payment obligation in

the sub-item " Creditors by Interest on Deposits Received as Guarantee " .

(15) In case of accident, said funds must be applied against the Debtor by Accident

corresponding, considering its effects by the reinsurance operations associated with said

accident.

Series III. Criteria relative to the basic consolidated financial statements.

a)

Minimum Catalog (C-1)

(1) In this section the concepts that form part of the Balance Sheet and of the

Income Statement (including order accounts) of Institutions and Mutual Societies are listed.

1)

Balance Sheet

Total Asset

Investments

Securities and Operations with Derivative Products

Securities

Governmental

Private Companies. Known Rate

Private Companies. Variable Income

Foreigners

Dividends to Receive on Capital Titles

Deterioration of Securities (-)

Investments in Securities Given in Loan

Restricted Securities

Derivative Products Operations

Premium Paid for Options Contracts

Contributions and Guarantees of Derivatives Operations

Fair Value (active part) at the moment of acquisition

Debtor by Repo

Credit Portfolio (Net)

Current Credit Portfolio

On Policies

Housing Credits

Commercial Credits

Unsecured Credits

Loans by Financial Reinsurance Contracts Granted

Discounts and Rediscounts

Overdue Credit Portfolio

On Policies

Housing Credits

Commercial Credits

Unsecured Credits

Loans by Financial Reinsurance Contracts Granted

Discounts and Rediscounts

Preventive Estimates for Credit Risk

Housing Credits

Commercial Credits

Unsecured Credits

Loans by Financial Reinsurance Contracts Granted

Discounts and Rediscounts

Real Estate (Net)

Real Estate

• Net Valuation
• Depreciation (-)

Investments for Labor Obligations

Availability

• Cash
• Banks, Checking Account

Debtors

• For Premiums
• Debtor for Premium by Subsidy Damages
• Charges against Dependencies and Entities of the Federal Public Administration
• Premiums to be Collected from Issued Surety Bonds
• Agents and Adjusters
  • Agents, Current Account
  • Unreported Charged Premiums
  • Adjusters, Current Account
• Documents to be Collected
• Debtors for Liabilities
• Debtors for Liabilities of Surety Bonds due to Paid Claims
• Debtors for Surety Insurance Claims
• Provisions for Funds Received from Individuals (-)
• Others
• Various Debtors
• Deposits as Guarantee
• VAT to be Applied
• Debtors for Interest on Deposits Received as Guarantee
• Headquarters and Branches, Current Account
• Debtors for Analogous and Related Services
• Debtors for Co-insurance Operations
• Premiums in Co-insurance
• Estimates to Recover from Co-insurance for Pending Claims
• Adjustment Expenses for Co-insurance Operations
• Income and Expenses to Recover from Co-insurance
• Provision for Write-offs (-)
  • Provision for Write-offs of Premiums to be Collected
  • Provision for Write-offs of Various Charges
  • Provision for Write-offs of Unreported Charged Premiums
  • Provision for Write-offs of Debtors for Liabilities

Reinsurers and Reassurers

Insurance and Surety Institutions

• Institutions, Current Account
• Commissions to be Collected from Ceded Reinsurance and Reassurance
• Retained Deposits
• Premiums Retained for Taken Reinsurance and Reassurance
• Claims Retained for Taken Reinsurance
• Recoverable Amounts from Reinsurance
  • By Participation of Foreign Institutions or Reinsurers for Risks in Course (Valuation at Agreed Technical Rate)
  • By Participation of Foreign Institutions or Reinsurers for Long-Term Risks in Course due to Variations in Interest Rates
  • By Participation of Foreign Institutions or Reinsurers for Pending Claims
  • By Participation of Foreign Institutions or Reinsurers in the Reserve for Surety Bonds in Force
  • By Participation of Reinsurers for Salvage Pending Sale from Taken Reinsurance
  • By Participation of Reinsurers in Cash-Paid Claims from Taken Reinsurance
  • By Participation of Reassurers and Reinsurers for Surety Bond Claims and Claims Paid for Surety Insurance
  • By Participation of Reassurers in Constituted Liabilities
  • By Participation of Reinsurers for Non-Proportional Reinsurance and Reassurance Coverages
• Preventive Provision for Credit Risks of Foreign Reinsurers (-)
• Recoverable Amounts from Reinsurance due to the application of valuation methods in the reserve for risks in course
• Recoverable Amounts from Reinsurance due to the application of valuation methods in the reserve for obligations pending fulfillment for claims occurred and not reported

Reinsurance and Reassurance Intermediaries

• Provision for Write-offs (-)

Permanent Investments

• Subsidiaries
• Associates
• Other Permanent Investments

Other Assets

• Total Furniture and Equipment
  • Furniture and Equipment
  • Furniture and Equipment acquired through Lease Contracts
  • Accumulated Depreciation of Furniture and Equipment (-)
  • Accumulated Depreciation of Furniture and Equipment Acquired under Lease (-)

Total Adjudicated Assets

• Adjudicated Assets
• Adjudicated Assets Derived from Disposition of Investments
• Provision for Write-offs (-)
• Various
• Inventory of Salvage to be Realized
• Prepayments
  • Taxes Paid in Advance
  • Deferred Tax on Profit to be Applied
  • Deferred Employee Profit Participation (In favor)

Amortizable Intangible Assets

• Establishment and Reorganization Expenses
• Adaptation and Improvement Expenses
• Other Concepts to Amortize
• Expenses for Issuance and Placement of Subordinated Bonds Convertible Obligatorily into Capital, to Amortize
• Expenses for Issuance and Placement of Subordinated Bonds Not Susceptible of Being Converted into Shares
• Expenses for Issuance and Placement of Other Securities
• Costs and expenses associated with granting Credit
• Amortization (-)
  • Accumulated Amortization of Establishment and Reorganization Expenses
  • Accumulated Amortization of Adaptations and Improvements
  • Accumulated Amortization of Expenses for Issuance of Debt Instruments

Long-Term Intangible Assets

• Long-Term Intangible Assets
• Impairment of Value of Long-Term Assets (-)

Total Liability

Technical Reserves

Risk in Course Reserve

• Risk in Course Reserve (Valuation at Agreed Technical Rate)
  • Life Insurance
    • Individual Life
    • Collective Life
    • Group Life
  • Accident and Health Insurance
    • Medical Expenses
    • Personal Accidents
    • Health
  • Property Insurance
    • Civil Liability and Professional Risks
    • Marine and Transport
    • Fire
    • Agricultural and Animal
    • Automobiles
    • Credit
    • Surety
    • Housing Credit
    • Financial Guarantee
    • Catastrophic Risks
    • Various
  • Taken Reassurance
  • Surety Bonds in Force Reserve
    • Fidelity
    • Judicial
    • Administrative
    • Credit
    • Guarantee Trusts

Result in the Valuation of the Long-Term Risk in Course Reserve due to Variations in Interest Rates

• Life Insurance
  • Individual Life
  • Collective Life
  • Group Life
• Accident and Health Insurance
  • Medical Expenses
  • Personal Accidents
  • Health
• Property Insurance
  • Civil Liability and Professional Risks
  • Marine and Transport
  • Fire
  • Agricultural and Animal
  • Automobiles
  • Credit
  • Surety
  • Housing Credit
  • Financial Guarantee
  • Catastrophic Risks
  • Various
• Taken Reassurance
• Surety Bonds in Force Reserve
  • Fidelity
  • Judicial
  • Administrative
  • Credit
  • Guarantee Trusts

Effects by Application of Valuation Methods of the Risk in Course Reserve

• Special Technical Reserve for Use of Experimental Tariffs

Reserve for Obligations Pending Fulfillment

• For expired policies and claims occurred pending payment. Known amounts
  • Life
  • Accidents and Diseases
  • Damages
• For expired policies and claims occurred pending payment. Unknown amounts susceptible to adjustments
  • Accidents and Diseases
  • Damages
• For expired policies and claims occurred pending payment. For dividends and periodic profit distributions
  • Life
  • Accidents and Diseases
  • Damages
• For claims occurred and not reported and adjustment expenses assigned to claims.
  • Life
  • Accidents and Diseases
  • Damages
• For funds in administration
• For Premiums in Deposit
• Effects by Application of Valuation Methods of the Reserve for Obligations Pending Fulfillment for Occurred and Not Reported Claims

Contingency Reserve

• Pension Insurance derived from social security
• Other insurance
• Surety Bonds

Reserves for Specialized Insurance

• Special provision reserve for claims (mutualist)
• Reserve for Investment Fluctuation

Catastrophic Risk Reserves

• Agricultural and Animals
• Credit
• Surety
• Housing Credit
• Financial Guarantee
• Earthquake
• Hurricane and Other Hydrometeorological Risks

Reserves for Labor Obligations

Creditors

• Agents and Adjusters
  • Agents, Current Account
  • Commissions to Accrue
  • Reserve for Additional Compensation to Agents
  • Adjusters, Current Account
  • Funds in Administration of Losses
  • Creditors for Funds in Administration of Losses
  • Creditors for Expenses Carried Out by Administration of Losses
  • Creditors for Liabilities of Surety Bonds due to Constituted Liabilities
  • Various
  • Rights of Inspection and Surveillance
  • Dividends to Pay on Shares
  • Creditors for Intermediation of Other Services
  • Creditors for Interest on Deposits Received as Guarantee for Surety Bonds
  • Creditors for Lease Contracts
  • Creditors for Interest on Subordinated Bonds with Mandatory Conversion to Capital
  • Creditors for Cancelled Policies
  • Various Creditors
  • Charges in favor of IMSS
  • Creditors for Co-insurance Operations
    • Premiums in Co-insurance
    • Salvage in Co-insurance
    • (-) Commissions for Co-insurance Operations
    • Recovery of claims chargeable to third parties
    • Expenses for Co-insurance
  • Charges to the Special Insurance Fund
  • Provisions for Additional Benefits
  • Headquarters and Branches
  • Dividends and Bonuses to Pay on Surety Bond Policies
  • Charges for Credit Lines

Reinsurers and Reassurers

• Insurance and Surety Institutions
  • Institutions, Current Account
  • Commissions to Pay for Taken Reinsurance
  • Retained Deposits
  • Premiums Retained for Ceded Reinsurance and Reassurance
  • Reserve for Claims Retained for Ceded Reinsurance
  • Other Participations
    • Participation of Reinsurers for Salvage Pending Sale for Ceded Reinsurance
    • Participation to Reassurers and Reinsurers for Guarantees Pending Recovery
    • Participation to Reassurers for Recoveries, to Pay
    • Creditors for Premiums of Non-Proportional Reinsurance and Reassurance Coverages
• Reinsurance and Reassurance Intermediaries
• Derivatives Products Operations. Fair Value (liability side) at the time of acquisition

Obtained Financing

• Debt Issuance
  • Subordinated Bonds Not Susceptible of Being Converted into Shares
  • Other Securities
  • Financial Reinsurance Contracts

Other Liabilities

• Provision for Worker Participation in Profit
• Provision for Payment of Taxes
• Other Obligations
• Deposits as Guarantee for Rents
• Provision for Various Obligations
• Taxes Retained on Behalf of Third Parties
• VAT to Pay
• VAT to Accrue
• Deposits as Guarantee for Granting Credits
• Creditors for Granting Credits
• Deferred Credits
• Provision for Deferred Worker Participation in Profit
• Provision for Deferred Tax on Profit
• Surcharges on Premiums to Accrue
• Products Collected in Advance
• Commissions for Granting Credits
• Financial Income to Accrue Derived from Granting Credits
• Financial Income to Accrue in Capitalizable Lease Contracts

Total Equity

Contributed Capital

• Paid-in Capital or Social Fund
• Capital or Social Fund
• Capital or Fund Not Subscribed (-)
• Capital or Social Fund Not Exhibited (-)
• Own Shares Repurchased (-)
• Subordinated Bonds with Mandatory Conversion to Capital

Earned Capital

• Reserves
  • Legal
  • For Acquisition of Own Shares
  • Others
• Reserve for Premiums in Share Sale
• Contributions for Future Capital Increases
• Other Reserves
• Organization Fund
• Surplus from Valuation
  • Surplus from Valuation of Real Estate
  • Surplus from Valuation of Real Estate Acquired under Lease
  • Deferred Income Tax on Valuation of Real Estate
  • Surplus from Valuation of Securities
  • Deficit from Valuation of Securities
  • Result from Monetary Position of Investments Available for Sale
  • Deferred Income Tax from Investments Available for Sale
  • Result in the Valuation of the Risk in Course Reserve due to variations in Rates
  • Surplus/Deficit from Valuation of the Long-Term Risk in Course Reserve
  • Deferred Income Tax from the Long-Term Risk in Course Reserve
• Permanent Investments
  • Undistributed Profits from Permanent Investments
  • Participation in Update of Accounting Capital of Permanent Investments
  • Participation in Accounting Capital Accounts of Permanent Investments
• Results or Remainders of Previous Years
  • Result or Remainder of the Year
  • Result from Holding Non-Monetary Assets
  • Correction by Reexpression
  • Result from Holding Non-Monetary Assets
  • Remediations for Defined Benefits to Employees
• Controlling Participation
• Non-Controlling Participation

Total Off-Balance Sheet Accounts

• Values in Deposit
• Values in Custody
• Values in Pledge
• Seized Goods
• Collateral for Financial Guarantee Insurance
• Funds in Administration
  • Funds for Labor Obligations in Administration
  • Funds in Administration
  • Funds Received in Administration of Losses
• Trusts
• Products in Favor of Settlers in Administration
• Liabilities for Surety Bonds in Force
  • Surety Bonds in Force
  • (-) Surety Bonds Ceded in Reassurance
  • Recovery Guarantees
    • Recovery Guarantees for Issued Surety Bonds
    • Recovery Guarantees for Surety Insurance
    • (-) Participation to Reinsurers and Reassurers for Recovery Guarantees
      • (-) For Issued Surety Bonds
      • (-) For Surety Insurance
• Claims Received Pending Verification
  • Claims Received
  • (-) Participation of Received Claims
• Contingent Claims
  • Contingent Claims
  • (-) Participation of Contingent Claims
• Paid Claims
  • Paid Claims
  • (-) Participation of Paid Claims
• Cancelled Claims
  • Cancelled Claims of the Year
  • (-) Participation of Cancelled Claims
• Recovery of Paid Claims
  • Recovery of Paid Claims
  • (-) Participation of Recovery of Paid Claims
• Fiscal Loss to Amortize
• Reserve to Constitute for Labor Obligations

Registration Accounts

Of Capital

• Updated Contribution Capital
• Emitted Subordinated Bonds
• Surplus from Capitalized Valuation of Real Estate

Of Fiscal Registration

• Asset to Depreciate
• Expenses to Amortize
• Adjustment by Fiscal Update
• Fiscal Result
• Net Fiscal Profit to Distribute
• Various
• Uncollectible Accounts
  • (-) Participation of Uncollectible Accounts by Reassurance
• Purchase of Currency Hedges
• Depositaries of Surety Bonds to Issue
• Sanctions Imposed Pending Payment
• Accrued Interest Not Collected Derived from Overdue Credit Portfolio
• Unspecified Various Concepts
• Derivatives Products Operations
  • Acquisition of Option Contracts
  • Rights and Obligations for Futures Operations
  • Acquisition of Swaps
  • Acquisition of Forwards
• Operations with Securities Granted in Loan
• Guarantees Received for Derivatives
• Guarantees Received for Repo

2) Statement of Results

• Emitted Premiums
  • Direct
  • Taken
• Ceded Premiums
  • Direct
  • Taken
• Retention Premiums
  • Direct
  • Taken
• Net Increase of Risk in Course Reserve and Surety Bonds in Force Reserve
  • Direct
  • Taken
• Accrued Retention Premiums
  • Direct
  • Taken

Net Acquisition Cost

• Commissions to Agents
• Additional Compensation to Agents
• Commissions for Taken Reinsurance and Reassurance
• Commissions for Ceded Reinsurance and Reassurance
  • Direct
  • Taken
• Excess of Loss Coverage
  • Direct
  • Taken
• Others
  • Direct
  • Taken

Net Cost of Claimancy, Claims and Other Obligations Pending Fulfillment

• Claimancy and Other Obligations Pending Fulfillment
  • Direct
  • Taken
• Recovered Claimancy from Non-Proportional Reinsurance
  • Direct
  • Taken
• Claims
  • Direct
  • Taken
• Recovered Claims from Non-Proportional Reinsurance and Reassurance
  • Direct
  • Taken

Technical Profit (Loss)

• Net Increase of Other Technical Reserves
  • Catastrophic Risk Reserve
  • Specialized Insurance Reserve
  • Contingency Reserve
  • Other Reserves

Result of Analogous and Related Operations

• Income from Administration of Related Services
• Income from Related Services
• Expenses for Analogous and Related Services

Gross Profit (Loss)

• Net Operating Expenses
  • Administrative and Operational Expenses
  • Remuneration and Benefits to Personnel
  • Depreciations and Amortizations

Operating Profit (Loss)

• Integral Financing Result
  • From Investments
    • From Sale of Investments
    • From Valuation of Investments
    • From Surcharge on Premiums
    • From Issuance of Debt Instruments
    • From Financial Reinsurance
    • Interest on Credits
    • Preventive Write-offs for Recoverable Amounts from Reinsurance
    • Preventive Write-offs for Credit Risks
    • Others
• Exchange Result
  • Result from Monetary Position
  • Participation in Result of Permanent Investments

Profit (Loss) before Income Tax

• Provision for Payment of Income Tax

Profit (Loss) before Discontinued Operations

• Discontinued Operations

Profit (Loss) of the Year

b) General Balance Sheet (C-2)

(1) This section aims to disclose the basic structure of the General Balance Sheet referred to in Chapter 24.1 of these Provisions.

(2) In accordance with Provisions 23.1.14. Fraction II and 38.1.8. Fraction III, subsection e), for the Consolidated General Balance Sheet, the "Controlling Participation" and "Non-Controlling Participation" lines must be incorporated separately in the capital grouping. Furthermore, information referenced in subitems I, II, III, and IV of Provision 24.1.8 must be included, requiring the following legends:

"This Consolidated General Balance Sheet was prepared in accordance with the accounting provisions issued by the National Commission of Insurance and Surety Bonds, applied consistently, correctly reflecting in their entirety the operations carried out by the Institution (or Mutual Society or Holding Company, as applicable) and its subsidiaries up to the aforementioned date, which were performed and valued in compliance with sound institutional practices and applicable legal and administrative provisions."

"This Consolidated General Balance Sheet was approved by the Board of Directors under the responsibility of the officials who sign it."

"The Consolidated Financial Statements and the Disclosure Notes forming an integral part of the consolidated financial statements can be consulted on the Internet, at the electronic page: ___________________________."

"The Consolidated Financial Statements are audited by the CPA _________________________, member of the firm named ___________________ contracted to provide external audit services to this institution/society; likewise, the technical reserves of the institution/society were audited by the Actuary ___________________________________."

"The Opinion issued by the external auditor, the Consolidated Financial Statements, and the notes forming an integral part of the audited Consolidated Financial Statements will be available for consultation on the Internet, at the electronic page: ____________________, starting forty-five business days after the close of the year __________."

"Likewise, the Report on Solvency and Financial Condition will be available for consultation on the Internet, at the electronic page: ____________________, starting ninety business days after the close of the year __________."

(3) In case those Institutions and Mutual Societies have capitalized part of the surplus from real estate valuation, the following note must be inserted at the foot of the Consolidated General Balance Sheet:

"Contributed capital includes the amount of $______________ national currency, originating from the partial capitalization of the surplus from real estate valuation."

c) Statement of Results (C-3)

(1)
This section aims to disclose the structure of the Statement of Results for the purposes stated in Chapter 24.1 of these Provisions.

In accordance with Provisions 23.1.14. Fraction III and 38.1.8. Fraction III, subsection e), for the Consolidated Statement of Results, the "Controlling Participation" and "Non-Controlling Participation" lines must be incorporated after the Profit (Loss) of the Year, and the following legends must be included at the foot:

"This Consolidated Statement of Results was prepared in accordance with the accounting provisions issued by the National Commission of Insurance and Surety Bonds, applied consistently, reflecting in a consolidated manner the income and expenses derived from operations carried out by the Institution (or Mutual Society or Holding Company, as applicable) and its subsidiaries for the aforementioned period, which were performed and valued in compliance with sound institutional practices and applicable legal and administrative provisions."

"This Consolidated Statement of Results was approved by the Board of Directors under the responsibility of the officials who sign it."

d) Statement of Cash Flows (C-4)

(1) This section aims to disclose the basic structure and methodology for the preparation of the Statement of Cash Flows referred to in Chapter 24.1 of these Provisions.

Objective and Scope

(2) This criterion aims to establish the general characteristics, as well as the structure that the Cash Flow Statement of Institutions and Mutual Societies or Holding Companies must have, which shall adhere to what is provided in this criterion, and to what is stated in Financial Information Standard NIF B-2 "Statement of Cash Flows". Likewise, minimum guidelines are established, with the purpose of homogenizing the presentation of this financial statement among entities, and thus facilitate its comparability.

Objective of the Cash Flow Statement

(3) The primary objective of the Cash Flow Statement is to provide users of financial statements with information about the capacity of Institutions and Mutual Societies or Holding Companies to generate cash and cash equivalents, as well as the manner in which entities use said Cash Flows to meet their needs.

(4) When the Cash Flow Statement is used together with the rest of the financial statements, it provides information that allows users to:

1) Evaluate changes in the entity's assets and liabilities and in its financial structure (including its liquidity and solvency), and

2) Evaluate both the amounts and dates of collections and payments, in order to adapt to circumstances and opportunities for generation and application of cash and cash equivalents.

(5) Likewise, the Cash Flow Statement presents operations that were carried out for accounting purposes in the period, i.e., when the collection or payment of the item in question materializes; while the statement of results shows accrued operations in the same period, i.e., when they are recognized accountingly at the moment they occur, regardless of the date they are considered realized for accounting purposes.

(6) The Cash Flow Statement allows Institutions and Mutual Societies to improve the comparability of information on the operational performance of different entities, because it eliminates effects generated by the use of different accounting treatments for the same transactions and economic events.

(7) Historical information on Cash Flows is used as an indicator of the amount, timing

of the generation and the probability of future Cash Flows. Furthermore, this information is useful to verify the accuracy of forecasts made in the past of future Cash Flows, to analyze the relationship between profitability and net Cash Flows, as well as, in its case, the effects of inflation when there is an inflationary environment.

Presentation Norms

General Considerations

(8) Institutions and Mutual Societies must exclude from the Statement of Cash Flows all operations that did not affect Cash Flows. For example:

1)
Conversion of debt to equity and distribution of dividends in shares; 2) Acquisition of a subsidiary with payment in shares; 3) Share-based payments to employees, and 4) Operations negotiated with asset exchange.

Structure of the Statement of Cash Flows

(9) Institutions and Mutual Societies must classify and present Cash Flows, according to their nature, in operating, investing, and financing activities, attending to their economic substance and not to the form used to carry them out.

(10) The structure of the Statement of Cash Flows must include, at a minimum, the following items:

1)
Operating activities;
2)
Investing activities;
3)
Financing activities;
4)
Net increase or decrease in cash and cash equivalents; 5) Effects of changes in the value of cash and cash equivalents; 6) Cash and cash equivalents at the beginning of the period, and 7) Cash and cash equivalents at the end of the period.

1)
Operating activities:

(11) Cash Flows related to these activities are those that derive from operations that constitute the main source of income for Institutions and Mutual Societies, therefore, they include activities that intervene in the determination of their net profit or loss, except those that are associated either with investing or financing activities. Some examples of Cash Flows from operating activities are:

1.1)
Payments for the acquisition of investments in securities; 1.2) Payments of premiums for the acquisition of options; 1.3) Receipts of premiums for the sale of options; 1.4) Outflows of cash and cash equivalents for debtors in repo operations; 1.5) Outflows of cash and cash equivalents for the granting of Credits; 1.6) Inflows of cash and cash equivalents from the receipt of interbank loans and from other entities; 1.7) Inflows of cash and cash equivalents from creditors in repo operations; 1.8) Inflows of cash and cash equivalents from collateral sold or given as guarantee; 1.9) Inflows of cash and cash equivalents from the issuance of subordinate obligations with liability characteristics; 1.10) Receipts of income from interest to which criterion C-2 "Statement of Results" refers, as well as its main associated, which come from, among others, the following concepts:

i.
Cash and cash equivalents (with the exception of profit or loss from changes arising from this concept); ii.
Margin accounts; iii.
Investments in securities, and iv. debtors in repo operations.

1.11)
Payments of interest expenses to which criterion C-2 refers, as well as its main associated, which come from, among others, the following concepts:

i. creditors in repo operations, and
ii. subordinate obligations with liability characteristics.

1.12)
Receipt of premiums issued from direct insurance and premiums for reinsurance or suretyship taken; 1.13) Payments of premiums for reinsurance or suretyship ceded, as well as for cancellations and returns of premiums; 1.14) Payments and receipts, as appropriate, of Commissions or Direct Compensation and expenses associated with the issuance of policies by the Institutions; 1.15) Payment of claims, settlements, and other contractual obligations and other expenses related to the handling of claims and settlements, as well as the collection of recoveries from reinsurers and sureties; 1.16) Receipts and payments arising from the purchase and sale of currencies and minted precious metals, investments in securities, derivatives; 1.17) Receipts from the sale of Adjudicated Assets; 1.18) Receipts and payments generated by derivatives for trading purposes; 1.19) Receipts and payments associated with hedging instruments for covered items that are classified as operating activities; 1.20) Payments for direct benefits to employees, fees, rents, promotion and advertising expenses, among other administrative expenses; 1.21) Payments of income taxes; 1.22) Receipts of income taxes (refunds);

(12) Income taxes.- Cash Flows related to income taxes must be presented in a separate item within the classification of operating activities, unless it is practical to relate them to investing or financing activities, as is the case of the tax derived from discontinued operations, which is related to investing activities.

2)
Investing activities:

(13) Cash Flows related to investing activities represent the extent to which Institutions and Mutual Societies have allocated resources to items that will generate income and Cash Flows in the future.

(14) Cash Flows from investing activities are, for example, the following:

2.1)
Receipts from the disposal of real estate, furniture, and equipment; 2.2) Payments for the acquisition of real estate, furniture, and equipment; 2.3) Receipts from the disposal of subsidiaries and associates; 2.4) Payments for the acquisition of subsidiaries and associates; 2.5) Receipts from the disposal of other permanent investments; 2.6) Payments for the acquisition of other permanent investments; 2.7) Receipts of cash dividends; 2.8) Payments for the acquisition of intangible assets; 2.9) Receipts from the disposal of long-term assets available for sale; 2.10) Receipts from the disposal of other long-term assets; 2.11) Payments for the acquisition of other long-term assets; 2.12) Receipts associated with hedging instruments for covered items that are classified as investing activities; 2.13) Payments associated with hedging instruments for covered items that are classified as investing activities;

(15) Investments in unconsolidated subsidiaries and associates.- Cash Flows between the holding entity and its unconsolidated subsidiaries or associates must be presented in the Statement of Cash Flows, that is, they must not be eliminated, such as Cash Flows related to the receipt and payment of dividends.

(16) Acquisitions and disposals of subsidiaries and other businesses.- Cash Flows derived from acquisitions or disposals of subsidiaries and other businesses must be classified in investing activities; likewise, they must be presented in a single separate line item that involves the entire acquisition operation or, in its case, the disposal, instead of presenting the individual acquisition or disposal of the assets and liabilities of said businesses at the date of acquisition or disposal. Cash Flows derived from acquisitions must not be offset with those from disposals.

(17) Cash Flows paid for the acquisition of subsidiaries and other businesses must be presented net of the balance of cash and cash equivalents acquired in said operation.

(18) Cash Flows received from the disposal of subsidiaries and other businesses (discontinued operations) must be presented net of the balance of cash and cash equivalents disposed of in said operation. Likewise, this amount must be net of the income tax attributable to such disposal. In the case of foreign operations, this amount must be shown net of the accumulated adjustment for conversion attributable to said operations.

3)
Financing activities:

(19) Cash Flows destined for financing activities show the entity's capacity to restore to its shareholders and creditors (for example, holders of subordinate obligations with equity characteristics), the resources they allocated at the time to the entity and, in its case, to pay them returns.

(20) Cash Flows from financing activities are, for example, the following:

3.1)
Receipts of cash and cash equivalents from the issuance of shares of the entity itself, net of the related issuance expenses; 3.2) Payments of cash and cash equivalents to shareholders for refunds of share capital, dividends, or associated with the repurchase of own shares; 3.3) Receipts from the issuance of subordinate obligations with equity characteristics; 3.4) Payments of interest and principal associated with subordinate obligations with equity characteristics;

4)
Net increase or decrease in cash and cash equivalents:

(21) After classifying Cash Flows in operating activities, investing activities, and financing activities, the net cash flows of these three sections must be presented.

5)
Effects of changes in the value of cash and cash equivalents:

(22) Institutions and Mutual Societies must present in a separate line item, as applicable, the following:

5.1)
The effects of conversion referred to in the section "conversion of the Statement of Cash Flows from the functional currency to the reporting currency", which arise from having used different exchange rates for the conversion of the initial balance, the final balance, and the Cash Flows, of a foreign operation; 5.2) The effects of profit or loss from changes in cash and cash equivalents referred to in the section "conversion of balances or Cash Flows in foreign currency", which includes the difference generated by the conversion of the initial balance of cash and cash equivalents at the exchange rate published by the Bank of Mexico in the Official Gazette of the Federation (DOF) on the business day following the closing date of the previous period, and of the final balance of cash and cash equivalents at the exchange rate published by the Bank of Mexico in the DOF on the business day following the closing date of the current period; 5.3) The effects on the balances of cash and cash equivalents from changes in their value resulting from fluctuations in their Fair Value, and 5.4) The effects of inflation associated with the balances and Cash Flows of any of the entities that make up the consolidated economic entity and that are in an inflationary economic environment.

6)
Cash and cash equivalents at the beginning of the period:

(23) Institutions and Mutual Societies must present a separate item called "Cash and cash equivalents at the beginning of the period", which corresponds to the balance of cash and cash equivalents presented in the Balance Sheet at the end of the previous period (including restricted availability), in order to reconcile it with the balance of cash and cash equivalents at the end of the current period.

7)
Cash and cash equivalents at the end of the period:

(24) Institutions and Mutual Societies must present a separate item called "Cash and cash equivalents at the end of the period", which must be determined by the algebraic sum of the items: "Net increase in cash and cash equivalents" or "Net decrease in cash and cash equivalents", "Effects of changes in the value of cash and cash equivalents", and "Cash and cash equivalents at the beginning of the period". This sum must correspond to the balance of cash and cash equivalents presented in the Balance Sheet at the end of the period.

Additional Considerations

(25) Financial instruments for hedging purposes.- When a financial instrument is held for hedging purposes, the Cash Flows of said instrument must be classified in the same way as the Cash Flows from the covered item.

Procedure for preparing the Statement of Cash Flows

(26) To determine and present the Cash Flows from operating activities, the entity must apply the indirect method, through which the net result of the period is increased or decreased by the effects of transactions of items that do not imply a cash flow; changes that occur in the balances of operating items, and by Cash Flows associated with investing or financing activities.

(27) The net cash flows related to operating activities must be determined by increasing or decreasing the net result by the effects of:

1)
Items that do not imply a cash flow, such as: losses from impairment or effect from reversal of impairment associated with investing activities (for example, of real estate, and other long-term assets); depreciation of real estate, furniture, and equipment; amortization of intangible assets; provisions; income taxes accrued and deferred; participation in the result of unconsolidated subsidiaries and associates, and discontinued operations (for example, in the case of the abandonment of a subsidiary or other business); 2) Changes that occur in the balances of operating items in the Balance Sheet of the entities during the period, such as: changes arising from margin accounts, investments in securities, debtors in repo operations, securities lending (asset), derivatives (asset), loans, creditors in repo operations, securities lending (liability), collateral sold or given as guarantee, derivatives (liability), obligations in securitization operations, and subordinate obligations with liability characteristics, and 3) Cash Flows associated with investing or financing activities.

(28) Institutions and Mutual Societies must determine and present separately, after the operating activities item, the Cash Flows derived from the main concepts of gross receipts and payments related to investing and financing activities, that is, receipts and payments must not be offset against each other.

Conversion of the Statement of Cash Flows of a foreign operation to the reporting currency

(29) In the conversion of the Statement of Cash Flows from the functional currency to the reporting currency of a foreign operation that is in a non-inflationary economic environment, entities must comply with the following:

1)
Cash Flows of the period must be converted at the historical exchange rate, which will be the one published by the Bank of Mexico in the DOF on the business day following the date on which each cash flow in question was generated; 2) The initial balance of cash and cash equivalents must be converted at the exchange rate published by the Bank of Mexico in the DOF on the business day following the closing date of the previous period, and 3) The final balance of cash and cash equivalents must be converted at the exchange rate published by the Bank of Mexico in the DOF on the business day following the closing date of the current period.

(30) In the conversion of the Statement of Cash Flows from the functional currency to the reporting currency of a foreign operation that is in an inflationary economic environment, entities must comply with the following:

1)
Cash Flows of the period must be converted at the exchange rate published by the Bank of Mexico in the DOF on the business day following the closing date of the current period; 2) The initial balance of cash and cash equivalents must be converted at the exchange rate published by the Bank of Mexico in the DOF on the business day following the closing date of the current period, and 3) The final balance of cash and cash equivalents must be converted at the exchange rate published by the Bank of Mexico in the DOF on the business day following the closing date of the current period.

(31) For the conversion of Cash Flows of the period, for practical reasons, a representative exchange rate of the conditions existing on the dates on which the Cash Flows were generated may be used, such as the weighted average exchange rate of the period; notwithstanding the foregoing, when exchange rates have varied significantly during the period, said exchange rate must not be used.

(32) The effect of conversion that arises from having used different exchange rates for the conversion of the initial balance, the final balance, and the Cash Flows must be presented in the item called "Effects of changes in the value of cash and cash equivalents", referred to in paragraph b) of the section "effects of changes in the value of cash and cash equivalents". This effect must correspond to what would have been obtained by converting both the initial balance of cash and the Cash Flows of the period, at the closing exchange rate with which the final balance of cash and cash equivalents was converted.

Conversion of balances or Cash Flows in foreign currency

(33) In order to determine the changes in the balances of operating items in foreign currency of operating activities, these must be converted at the closing exchange rate published by the Bank of Mexico in the DOF on the business day following said closing date.

(34) Cash Flows from transactions in foreign currency related to investing and financing activities will be converted to the entity's reporting currency by applying to the amount in foreign currency the exchange rate at the date on which each flow occurred, which will be the one published by the Bank of Mexico in the DOF on the business day following the date on which said flow was generated.

(35) Profit or loss from changes originating from variations in the exchange rate are not Cash Flows. However, the effect of variations in the exchange rate of cash and cash equivalents held or payable in foreign currency is presented in the Statement of Cash Flows in order to reconcile cash and cash equivalents at the beginning and at the end of the period. This effect must be presented separately from the items of operating, investing, and financing activities, within the item called "Effects of changes in the value of cash and cash equivalents", referred to in paragraph 32, which includes the differences, if any, of having presented the Cash Flows at the closing exchange rate of the current period.

Effects of Inflation

(36) When, in terms of what is established in NIF B-10 "Effects of Inflation", the economic environment corresponds to a non-inflationary environment, Institutions and Mutual Societies must present their Statement of Cash Flows expressed in nominal values, while if said economic environment is inflationary, entities must present their Statement of Cash Flows expressed in monetary units of purchasing power at the closing date of the current period.

(37) In cases where the economic environment of the entities is inflationary, as part of operations that did not affect Cash Flows, the effects of inflation recognized in the period within the financial statements must be excluded, in order to determine a Statement of Cash Flows at nominal values. Such Cash Flows must be presented expressed in monetary units of purchasing power at the closing date of the current period.

(38) When the environment of Institutions and Mutual Societies has changed from non-inflationary to inflationary, the Statements of Cash Flows of previous periods must be presented expressed in monetary units of purchasing power of the closing date of the current period.

(39) In cases where the economic environment of the entities has changed from inflationary to non-inflationary, the Statements of Cash Flows of previous periods must be presented expressed in the monetary units of purchasing power of the last Statement of Cash Flows presented within an inflationary environment and included in said comparative presentation.

Consolidated Statement of Cash Flows

(40) In the preparation of the consolidated Statement of Cash Flows, Cash Flows that occurred in the period between the Institutions and Mutual Societies that are part of the economic entity that consolidates must be eliminated. For example, Cash Flows derived from intercompany operations, capital contributions, and dividends paid.

(41) In cases where a controlling entity purchases or sells shares of a subsidiary to the non-controlling interest, the Cash Flows associated with said operation must be presented as financing activities, within the consolidated Statement of Cash Flows. This is because this operation is considered a transaction between shareholders.

NAME OF THE INSTITUTION, MUTUAL SOCIETY OR HOLDING COMPANY

STATEMENT OF CASH FLOWS

FROM __ OF __________ TO __ OF __________ OF ____

EXPRESSED IN MONETARY UNITS OF PURCHASING POWER OF ________ OF _______

(1)

(1) This line will be omitted if the economic environment is "non-inflationary".

Net result

Adjustments for items that do not imply cash flow:
$
Profit or loss from valuation associated with investing and financing activities " Estimation for Bad Debt or difficult collection " Losses from impairment or effect from reversal of impairment associated with investing and financing activities " Depreciations and amortizations " Adjustment or increase to technical reserves Provisions " Income taxes accrued and deferred " Participation in the result of unconsolidated subsidiaries and associates " Discontinued operations " $ Operating activities

Change in margin accounts
$
Change in investments in securities
"
Change in debtors in repo operations
"
Change in securities lending (asset)
"
Change in derivatives (asset)
"
Change in premiums receivable
Change in debtors
Change in reinsurers and sureties
Change in Adjudicated Assets
"
Change in other operating assets
"
Changes in contractual obligations and expenses associated with claim handling Change in derivatives (liability) " Change in other operating liabilities " Change in hedging instruments (of covered items related to operating activities) " Net cash flows from operating activities " Investing activities

Receipts from disposal of real estate, furniture, and equipment $ Payments for acquisition of real estate, furniture, and equipment " Receipts from disposal of subsidiaries and associates

"Payments for acquisition of subsidiaries and associates"

"Receipts from disposal of other permanent investments"

"Payments for acquisition of other permanent investments"

"Receipts of cash dividends"

"Payments for acquisition of intangible assets"

"Receipts from disposal of long-term assets held for sale"

"Receipts from disposal of other long-term assets"

"Payments for acquisition of other long-term assets"

"Net cash flows from investing activities"

"Financing Activities"
Receipts from issuance of shares
$
"Payments for repayment of share capital"

"Payments of cash dividends"

"Payments associated with the repurchase of own shares"

"Receipts from the issuance of subordinated obligations with equity characteristics"

"Payments associated with subordinated obligations with equity characteristics"

"Net cash flows from financing activities"

"Net increase or decrease in cash"
$
"Effects from changes in cash value"

"Cash and cash equivalents at the beginning of the period"

"Cash and cash equivalents at the end of the period" $

(42) In accordance with Provisions 23.1.14, Fraction V and 38.1.8, Fraction III, subsection e), in the case of the Statement of Cash Flows, the following legends must be included:

"The present Consolidated Statement of Cash Flows was prepared in accordance with the accounting provisions issued by the National Commission of Insurance and Sureties, applied consistently, reflecting all cash inflows and outflows that occurred in the Institution (or in its case, Mutual Society or Holding Company) and its subsidiaries for the aforementioned period, which were carried out and valued in compliance with sound institutional practices and applicable legal and administrative provisions.

"The present Consolidated Statement of Cash Flows was approved by the Board of Directors under the responsibility of the officials who sign it."

e)

Statement of Changes in Shareholders' Equity and Equity (C-5)

(1) This section aims to disclose the basic structure and methodology for the preparation of the Statement of Changes in Shareholders' Equity referred to in Chapter 24.1 of these Provisions.

Background

(2) Financial information must fulfill, among other things, the purpose of reporting modifications in owners' investment during a defined accounting period, requiring the establishment, through specific criteria, of the objectives and general structure that the Statement of Changes in Shareholders' Equity must have.

Objective and Scope

(3) This criterion aims to establish the general characteristics, as well as the structure that the Statement of Changes in Shareholders' Equity of Institutions and Mutual Societies must have, which must adhere to what is provided in this criterion. Likewise, minimum guidelines are established with the purpose of homogenizing the presentation of this financial statement among the aforementioned entities, and in this way, facilitate its comparability.

Objective of the Statement of Changes in Shareholders' Equity

(4) The Statement of Changes in Shareholders' Equity aims to present information on the movements in the investment of owners of Institutions and Mutual Societies during a specific period.

(5) Consequently, this financial statement will show the increase or decrease in the equity of the aforementioned entities, derived from two types of movements: inherent to owners' decisions and to the recognition of comprehensive income.

(6) This criterion does not aim to establish the mechanics by which the aforementioned movements are determined, as they are subject to accounting criteria for Institutions and Mutual Societies or specific NIFs established regarding this matter.

Concepts Integrating the Statement of Changes in Shareholders' Equity

(7) In a general context, the concepts by which modifications to shareholders' equity are presented are the following:

(8) Movements inherent to owners' decisions.- Within this type of movements are those directly related to the decisions taken by owners regarding their investment in the entity. Some examples of this type of movement are the following:

1)

Subscription of shares;

2)

Capitalization of profits;

3)

Establishment of reserves;

4)

Transfer of net result to prior years' results, and

5)

Payment of dividends.

(9) Movements inherent to the recognition of comprehensive income.- These refer to increases or decreases during a period, derived from transactions, other events, and circumstances, from sources not linked to owners' decisions. The purpose of reporting this type of movement is to measure the entity's performance by showing the Changes in Shareholders' Equity derived from the net result of the period, as well as those items whose effect, due to specific provisions of some accounting criteria for Institutions and Mutual Societies or NIFs, are reflected directly in shareholders' equity and do not constitute contributions, reductions, or distributions of capital, such as, for Institutions and Mutual Societies:

1)

Result from valuation of available-for-sale securities;

2)

Result from valuation of Cash Flow Hedge Instruments;

3)

Accumulated effect from translation, and

4)

Result from holding non-monetary assets.

Structure of the Statement of Changes in Shareholders' Equity of Institutions and Mutual Societies.

(10) The Statement of Changes in Shareholders' Equity will include all concepts that integrate shareholders' equity; their valuation will be carried out in accordance with the corresponding accounting criteria for Institutions and Mutual Societies. These concepts are listed below:

1)

Paid-in capital or social fund;

2)

Contributions for future capital increases formalized by its governing body;

3)

Share premium;

4)

Subordinated obligations in circulation;

5)

Capital reserves;

6)

Results from prior years;

7)

Result from valuation of available-for-sale securities;

8)

Result from valuation of Cash Flow Hedge Instruments;

9)

Accumulated effect from translation;

10)

Result from holding non-monetary assets, and

11)

Net result.

Presentation of the Statement of Changes in Shareholders' Equity

(11) The concepts described above correspond to the minimum required for the presentation of the Statement of Changes in Shareholders' Equity; however, Institutions and Mutual Societies must break down, either in the cited Statement of Changes in Shareholders' Equity or through notes to the financial statements, the content of the concepts they consider necessary to show the financial situation of the entity to the user of the financial information. At the end of this criterion, a Statement of Changes in Shareholders' Equity prepared with the minimum concepts referred to in the previous paragraph is shown.

Characteristics of the Concepts Composing the Structure of the Statement of Changes in Shareholders' Equity

(12) Movements must be incorporated into the concepts described in the structure of the Statement of Changes in Shareholders' Equity, cited above, according to the chronological order in which the events were presented:

1)

Movements inherent to owners' decisions.- Each concept related to this type of decision must be separated, in accordance with what is established in the paragraph on "movements inherent to owners' decisions" of this criterion, describing the concept and the date on which they were generated, and

2)

Movements inherent to the recognition of comprehensive income.- These must be separated according to the specific event or criterion that originates them, in accordance with the concepts mentioned in the paragraph on "movements inherent to the recognition of comprehensive income" of this criterion.

General Considerations

(13) The Statement of Changes in Shareholders' Equity must indicate the variations of the periods reported; this implies starting from the balances that integrate the shareholders' equity of the initial period, analyzing the movements that occurred from that date.

(14) Likewise, in case of an inflationary environment, all balances and movements incorporated in the Statement of Changes in Shareholders' Equity must be shown expressed in monetary units of purchasing power relative to the date of presentation of the financial statements.

NAME OF THE INSTITUTION, MUTUAL SOCIETY OR HOLDING COMPANY

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FROM DECEMBER 31, ____ TO DECEMBER 31, ____

FIGURES EXPRESSED IN CURRENCY OF PURCHASING POWER OF DECEMBER 31, ___ (1)

(1) This line will be omitted if the economic environment is "non-inflationary".

Contributed Capital

Earned Capital

Permanent Investments

Result from

Holding Non-Monetary Assets

Surplus or

Deficit from

Translation

Concept

Paid-in

Capital or

Social Fund

Subordinated

Obligations

Reserves of

capital

Results of

prior years

Result of

the period

Participation in

Other Shareholders' Equity Accounts

Result from

Holding Non-Monetary Assets

From Investments

Total shareholders' equity

Balance at December 31, _________

MOVEMENTS INHERENT TO SHAREHOLDERS' DECISIONS

Subscription of shares

Capitalization of profits

Establishment of Reserves

Payment of dividends

Transfer of results from prior years

Others

Total

MOVEMENTS INHERENT TO THE RECOGNITION OF COMPREHENSIVE INCOME

Comprehensive income

Result of the Period

Result from valuation of available-for-sale securities

Result from holding non-monetary assets

Others

Total

Balance at December 31, _______

(15) In accordance with Provisions 23.1.14, Fraction IV and 38.1.8, Fraction III, subsection e), for the Consolidated Statement of Changes in Shareholders' Equity and Equity, a column relative to "Non-Controlling Interest" must be incorporated, and the following legends must be included at the bottom:

"The present Consolidated Statement of Changes in Shareholders' Equity or Equity was prepared in accordance with the accounting provisions issued by the National Commission of Insurance and Sureties, applied consistently, reflecting all movements in shareholders' equity accounts derived from operations carried out by the institution (or in its case, Mutual Society or Holding Company) and its subsidiaries for the aforementioned period, which were carried out and valued in compliance with sound institutional practices and applicable legal and administrative provisions.

"The present Consolidated Statement of Changes in Shareholders' Equity or Equity was approved by the Board of Directors under the responsibility of the officials who sign it."

(16) The financial statements, as well as the Disclosure Notes, must be signed by at least the General Manager and the General Accountant, or their equivalents, as well as by the person responsible for carrying out internal audit functions.

(17) For the purposes referred to in the penultimate paragraph of Article 105 of the LISF, the review of the financial statements will be considered concluded if, within 180 natural days following their publication in terms of Provision 14.2.3, the Commission does not communicate observations to the Institution or Mutual Society regarding this matter.

(18) In accordance with what is established in these Provisions, Institutions and Mutual Societies may be subject to one or more of the sanctions established in the LISF for the following causes:

1)

For the failure to present the information requested in terms of this Chapter, or for the late presentation of said information, and

2)

For the incorrect, incomplete, or inadequate presentation of the information referred to in this Chapter, even if it has been presented on time and in the proper form.

f)

Financial Statements of Holding Companies of Financial Groups (C-6)

(1) For the preparation of the Consolidated Financial Statements of Holding Companies of Financial Groups referred to in Chapter 25.1 of these Provisions, such companies must adhere in their structure to what is established in criteria C-1 Minimum Catalog, C-2 Balance Sheet, C-3 Income Statement, C-4 Statement of Cash Flows, and C-5 Statement of Changes in Shareholders' Equity, of this Annex, and in accordance with Provision 25.1.2, they must note at the bottom of the basic consolidated financial statements the legends mentioned in said Provision.

ANNEX 23.1.8.

PRESENTATION OF THE AUDIT PROGRAM OF THE

INDEPENDENT EXTERNAL AUDITOR

Independent external auditors must present to this Commission, the audit program and its updates, of each of the Institutions and Mutual Societies in which they were hired as independent external auditors for the corresponding exercise, in the terms indicated below:

The audit program must be realized in a document in pdf format and must be electronically signed by the independent external auditor. The program must contain the detailed description of the general procedures to which Independent External Auditors will subject their work, in a free written document. The file containing the referred document(s) must be sent via product A23_1_8, which must be identified according to the following 33-character alphanumeric nomenclature that must be ordered as follows:

a)

In the first seven positions, A23_1_8 must be placed.

b)

From the eighth to the twenty-fifth position, the Unique Population Registry Key (CURP) of the independent external auditor must be placed.

c)

From the twenty-sixth to the thirty-third position, the date on which the audit program is sent must be indicated, specifying the year, month, and day.

Example:

For the case of the independent external auditor with CURP TOPM840920MDFRRR05, with a delivery date of October 31, 2015, the name of product A23_1_8 must be integrated as follows.

Position

1

2

3

4

5

6

7

8

9

1

0

1

1

1

2

1

3

1

4

1

5

1

6

1

7

1

8

1

9

2

0

2

1

2

2

2

3

2

4

2

5

2

6

2

7

2

8

2

9

3

0

3

1

3

2

3

3

Character

A

2

3

_

1

_

8

T

O

P

M

8

4

0

9

2

0

M

D

F

R

R

R

0

5

2

0

1

5

1

0

3

1

.ZI

P

.PG

P

The file corresponding to the audit program and its updates must be sent in a PDF file named PROGM, which must be identified according to the 25-character alphanumeric nomenclature, which must be ordered as follows:

a)

In the first seven positions, A23_1_8 must be placed.

b)

From the eighth to the twelfth position, the name of the product PROGM.

c)

In the thirteenth position, the key of the type of Institution or Mutual Society that corresponds must be placed.

Key

Definition

H

Insurance Institutions specialized in health insurance.

S

Insurance Institutions and Mutual Societies.

G

Insurance Institutions authorized to operate financial guarantee insurance.

V

Insurance Institutions authorized to operate housing credit insurance.

P

Insurance Institutions authorized for the practice of pension insurance derived from social security laws.

F

Surety Institutions.

d)

From the fourteenth to the seventeenth position correspond to the number assigned to the institution or society in question. This number must be preceded by zeros until occupying the four positions.

e)

From the eighteenth to the twenty-fifth position, the date on which the audit program is sent must be indicated, specifying the year, month, and day in eight positions.

Example:

For the case of an insurance institution with company key 0001 to send the file of package A23_1_8 with a delivery date of October 31, 2015 corresponding to the audit program of the 2015 exercise, the name of product PROGM must be constructed as follows.

Position

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Character

A

2

3

_

1

_

8

P

R

O

G

M

S

0

0

0

1

2

0

1

5

1

0

3

1

.PDF

---

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