Notice revoking the authorization granted to Nezter Seguros, S.A. de C.V. to operate as an insurance institution

DOF: 07/09/2017

OFFICE LETTER through which the authorization granted to Nezter Seguros, S

A seal with the National Coat of Arms is placed at the margin, which reads: United Mexican States.- Ministry of Finance and Public Credit.- National Insurance and Bonds Commission.- Presidency.- Legal Vice Presidency.- General Legal, Controversial and Sanctions Direction.- Sanctions and Appeals Direction.- File:
C00.422.26.1/002 " 17 ".- Office No. 06-C00-42200/40417.

SUBJECT: Authorization to operate as an insurance institution is revoked.

Nezter Seguros, S. A. de C. V.

(Before First American Title Insurance de México, S.A. de C.V.)

RFC: FAT110411FY7

Paseo de la Reforma No. 250

Tower "B", Floor 9, Office "C"

Juárez Neighborhood, Postal Code 06600

Mexico City.

TO: LEGAL REPRESENTATIVE.

Having reviewed the background of the administrative sanctioning procedure to revoke the authorization to operate as an Insurance Institution for Nezter Seguros, S. A. de C. V., formerly First American Title Insurance de México, S.A. de C.V.

BACKGROUND

Through office 101.-428 of August 2, 2011, published in the Official Gazette of the Federation on October 14, 2011, the Ministry of Finance and Public Credit issued:

" AUTHORIZATION GRANTED BY THE FEDERAL GOVERNMENT, THROUGH THE MINISTRY OF FINANCE AND PUBLIC CREDIT, TO FIRST AMERICAN TITLE INSURANCE DE MEXICO, S.A. DE C.V., TO ORGANIZE AND FUNCTION AS AN INSURANCE INSTITUTION SUBSIDIARY OF THE FOREIGN FINANCIAL INSTITUTION FIRST AMERICAN TITLE INSURANCE COMPANY, OF THE STATE OF CALIFORNIA, UNITED STATES OF AMERICA, THROUGH THE RELATED ENTITY FIRST AMERICAN HOLDINGS, LLC, OF THE STATE OF DELAWARE, UNITED STATES OF AMERICA, UNDER THE FOLLOWING TERMS:

FIRST ARTICLE.- In exercise of the power conferred upon the Federal Government by articles 5 and 33-C of the General Law of Insurance and Mutual Societies, First American Title Insurance de México, S.A. de C.V. is authorized to organize and function as an Insurance Institution subsidiary of the foreign financial institution First American Title Insurance Company, of the State of California, United States of America, through the related entity First American Holdings, LLC, of the State of Delaware, United States of America.

SECOND ARTICLE.- The subsidiary insurance institution referred to in this resolution is authorized to practice damage insurance operations, in the branch of various.

THIRD ARTICLE.- The subsidiary insurance institution referred to in this resolution shall be subject to the provisions of the General Law of Insurance and Mutual Societies, as well as those derived from it, to the General Law of Commercial Societies, the other laws applicable to it, and, in particular, to the following bases:

Its name shall be " First American Title Insurance de México. Variable Capital Anonymous Society ".

II.

Its share capital shall be variable according to the following:

a).- The minimum fixed capital without right to withdrawal shall be twenty-seven million five hundred thousand pesos National Currency.

b).- The variable capital with right to withdrawal in no case may exceed the paid capital without right to withdrawal.

III.

Its corporate domicile shall be in Mexico City, Federal District.

FOURTH ARTICLE.- By its very nature, this authorization is non-transferable. "

II.

Through office 366-III-0308/14 of April 2, 2014, addressed by the Ministry of Finance and Public Credit to First American Title Insurance de México, S.A. de C.V., and a copy marked to the General Legal Advisory and Intermediaries Direction of this Commission, said Ministry issued the following:

" RESOLUTION

First.- Subparagraph a) of fraction II, of Article Third of the authorization granted to First American Title Insurance de México, Variable Capital Anonymous Society subsidiary of First American Title Insurance Company, through the related entity First American Holdings, LLC, both from the United States of America, to organize and function as an insurance institution, is modified, to read as follows:

THIRD ARTICLE.- ...

I.- ...

II.- ...

a).- The minimum fixed capital without right to withdrawal shall be $39,694,000 (Thirty-nine million six hundred ninety-four thousand pesos 00/100 M.N.), which includes the amount of minimum paid capital indicated in article 29, fraction I, first paragraph of the General Law of Insurance and Mutual Societies.

b).- ...

III.- ... "

Second.- The authorization granted to First American Title Insurance de México, Variable Capital Anonymous Society to organize and function as an insurance institution, after the modification indicated in the previous Resolutive, remains entirely in the following terms:

SECOND ARTICLE.- The subsidiary insurance institution referred to in this resolution is authorized to practice damage insurance operations, in the branch of various.

I.- Its name shall be " First American Title Insurance de México, Variable Capital Anonymous Society ".

II.- Its share capital shall be variable according to the following:

a).- The minimum fixed capital without right to withdrawal shall be $39,694,000.00 (Thirty-nine million six hundred ninety-four thousand pesos 00/100 M.N.) which includes the amount of minimum paid capital indicated in article 29, fraction I, first paragraph of the General Law of Insurance and Mutual Societies.

b).- The variable capital with right to withdrawal in no case may exceed the paid capital without right to withdrawal.

III.- Its corporate domicile shall be Mexico City, Federal District.

FOURTH ARTICLE.- By its very nature, this authorization is non-transferable.

... "

III.

Through office 366-III-400/15 of May 28, 2015, addressed by the Ministry of Finance and Public Credit to Mr. Álvaro Julián Villagrán García, Robert Calamari, Matthew Evan Calamari, and to First American Title Insurance de México, S.A. de C.V., and a copy marked to the General Legal Advisory and Intermediaries Direction of this Commission, said Ministry issued the following:

" RESOLUTION

FIRST.- Authorizes Mr. Álvaro Julián Villagrán García to acquire 90% of the shares that make up the paid share capital of First American Title Insurance de México, S.A. de C.V.

SECOND.- Approves the reform in the terms of Annex 1 of this office, to the constitutive deed of First American Title Insurance de México, S.A. de C.V., which are necessary for it to cease being an insurance institution subsidiary and to comply with the regulation applicable in the General Law of Insurance and Mutual Societies, as well as for the change of name to Nezter Seguros, S.A. de C.V.

In this sense, you must send us within sixty business days following the date on which this office is notified, the first testimony and three simple copies of the public deed with registration data in the Public Commerce Registry in which the reform to the constitutive deed of First American Title Insurance de México, S.A. de C.V. is notarized, for the purpose of proceeding to the modification of the authorization granted to that insurer, to organize and function as an insurance institution.

... "

IV.

On December 18, 2015, office 366-III- 553/15 of August 28, 2015, issued by the Ministry of Finance and Public Credit, was published in the Official Gazette of the Federation, through which the authorization granted to First American Title Insurance de México, S.A. de C.V. was modified, due to the change of its name to Nezter Seguros, S.A. de C.V., and it was indicated that it must cease to be an insurance institution subsidiary, the substantial content of which is transcribed below:

" CONSIDERATIONS

The Fifth Transitory Provision of the Law of Insurance and Bonds Institutions establishes that approval requests received before the entry into force of that law, that is, before April 4, 2015, and which by virtue of it are assigned to the National Insurance and Bonds Commission, will be processed and resolved by this Ministry, for which it may, even after that date, continue to exercise the powers conferred on the basis of the General Law of Insurance and Mutual Societies that was repealed.

II.

That they sent to this Ministry the first testimony and three simple copies of public deed 67,454 with registration data in the Public Commerce Registry.

III.

That the modification to the authorization granted to First American Title Insurance de México, S.A. de C.V. to organize and function as an insurance institution derives from the approval indicated in subsection a) of Background II.

RESOLUTION

First.- The preamble and articles first, second, and third, first paragraph and fraction I, of the authorization granted to First American Title Insurance de México, S.A. de C.V., to organize and function as an insurance institution, are modified, to read as follows:

" AUTHORIZATION GRANTED BY THE FEDERAL GOVERNMENT, THROUGH THE MINISTRY OF FINANCE AND PUBLIC CREDIT, TO NEZTER SEGUROS, S.A. DE C.V. TO ORGANIZE AND FUNCTION AS AN INSURANCE INSTITUTION, UNDER THE FOLLOWING TERMS:

FIRST ARTICLE.- In exercise of the power conferred upon the Federal Government, through the Ministry of Finance and Public Credit, by article 5 of the General Law of Insurance and Mutual Societies, Nezter Seguros, S.A. de C.V. is authorized to organize and function as an insurance institution.

SECOND ARTICLE.- The insurance institution referred to in this resolution is authorized to practice damage insurance operations, in the branch of various.

THIRD ARTICLE.- The insurance institution referred to in this resolution shall be subject to the provisions of the General Law of Insurance and Mutual Societies, as well as those derived from it, to the General Law of Commercial Societies, the other laws applicable to it, and, in particular, to the following bases:

I.- Its name shall be Nezter Seguros followed by the words Variable Capital Anonymous Society, or its abbreviations S.A. de C.V.

... "

Second.- The authorization granted to Nezter Seguros, S.A. de C.V., to organize and function as an insurance institution, after the modification indicated in the previous Resolutive, remains entirely in the following terms:

AUTHORIZATION GRANTED BY THE FEDERAL GOVERNMENT, THROUGH THE MINISTRY OF FINANCE AND PUBLIC CREDIT, TO NEZTER SEGUROS, S.A. DE C.V. TO ORGANIZE AND FUNCTION AS AN INSURANCE INSTITUTION, UNDER THE FOLLOWING TERMS:

SECOND ARTICLE.- The insurance institution referred to in this resolution is authorized to practice damage insurance operations, in the branch of various.

I.- Its name shall be Nezter Seguros followed by the words Variable Capital Anonymous Society, or its abbreviations S.A. de C.V.

II.- Its share capital shall be variable, according to the following:

a) The minimum fixed capital without right to withdrawal shall be $39,694,000.00 (Thirty-nine million six hundred ninety-four thousand pesos 00/100 M.N.) which includes the amount of minimum paid capital indicated in article 29, fraction I, first paragraph of the General Law of Insurance and Mutual Societies.

b) The variable capital with right to withdrawal in no case may exceed the paid capital without right to withdrawal.

III.- The corporate domicile shall be Mexico City, Federal District.

FOURTH ARTICLE.- By its very nature, this authorization is non-transferable.

... "

That Insurance Institution presented to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to March 31, 2016, determining a shortage in the coverage of minimum paid capital of $3,338,403.68, as follows:

Coverage of Minimum Paid Capital

Computable Paid Capital

$23,607,564.90

Minimum Paid Capital

$26,945,968.58

Surplus or Shortage

-$3,338,403.68

The presentation of said report was made on May 2, 2016 with transaction number 183778, electronically, through the Electronic Information Sending System (SEIVE) in terms of what is provided for in Provision 39.1.5 of the Single Insurance and Bonds Circular, published in the Official Gazette of the Federation on December 19, 2014 and in force from April 4, 2015, as well as from Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Gazette of the Federation on April 1, 2015 and in force from April 4, 2015.

VI.

From the review carried out by the General Direction of Financial Supervision of this Commission, on the indicated Regulatory Report on Financial Statements, RR-7, corresponding to March 31, 2016, a probable shortage in the coverage of minimum paid capital of $3,904,929.96 was determined, as follows:

Coverage of Minimum Paid Capital

Figures in pesos

Concept

Company

CNSF

Equity Capital

Less:

23,607,564.90

Increase due to net valuation of real estate

Profit from valuation of capital stock investments.

Plus:

Increase due to valuation of real estate

susceptible of considering to minimum paid capital.

Computable Assets to Minimum Paid Capital

23,607,564.90

23,607,564.9

Minimum Paid Capital

26,945,968.58

27,512,494.86

Shortage

-3,338,403.68

-3,904,929.96

By virtue of the indicated determination of probable shortage, the General Direction of Financial Supervision of this Commission, through office No. 06-C00-22100/15956 of July 29, 2016, received by said Insurance Institution on August 1, 2016, required it to submit to the approval of this Commission a regularization plan to remedy the shortage in the coverage of minimum paid capital at March 31, 2016, determined for said Insurance Institution in the amount of $3,904,929.96, conduct probably contrary to article 49 of the Law of Insurance and Bonds Institutions, in relation to what is provided in the " Agreement on the Minimum Paid Capital that Insurance Institutions must allocate for each operation or branch they have authorized ", published in the Official Gazette of the Federation, on March 24, 2015, in relation to what is established in Chapter " 6.1.- On Minimum Paid Capital ", of the Single Insurance and Bonds Circular, published in the Official Gazette of the Federation on December 19, 2014, and in relation to the Second Transitory Provision of the aforementioned Law of Insurance and Bonds Institutions.

VII.

On August 18, 2016, electronically, through the System of Regularization Plans and Self-Correction Programs (SIPRED), with folio number PRE320-S011-000009- 20160818, said Insurance Institution, in the " Format for sending the Regularization Plans referred to in article 320 of the Law of Insurance and Bonds Institutions, Annex 39.5.16-a ", submitted to the approval of this Commission a regularization plan regarding the irregularities that motivated its requirement by this Commission, said Insurance Institution indicating the following specific objectives to reestablish solvency parameters:

Reactivation of the issuance of real estate title insurance policies.

Development of special real estate title insurance products that allow us to access massive mortgage markets with a low level of insured sum, such as social interest and/or microinsurance.

Renegotiation of economic conditions of the excess loss reinsurance contract, with the objective that the price adapts to the real production volume of the company, in the coverage period.

Contribution of sufficient resources by the current shareholders of the Institution to remedy the shortages in the coverage of minimum paid capital from February to October 2016. "

In the section " Various Clarifications " of the indicated " Format for sending the Regularization Plans referred to in article 320 of the Law of Insurance and Bonds Institutions, Annex 39.5.16-a ", said Insurance Institution indicated: " ... that the amount that was recorded in the RR-7 at March 31, 2016 of the minimum paid capital by this Institution of $26,945,968.58 ... is applicable to that date and not the one that that H. Commission indicates in its office No. 06-C00-22100/15956 since the value of the Investment Units that the Authority considered is applicable after May 31, 2016, date on which the Modifying Circular 10/16 of the Single Insurance Circular was published in the Official Gazette of the Federation and consequently it is not applicable for the figures recorded by said Institution in the RR-7 at March 31, 2016 " .

VIII.

That Insurance Institution presented to this Commission on August 19, 2016, the paper printout of the " Format for sending the Regularization Plans referred to in article 320 of the Law of Insurance and Bonds Institutions, Annex 39.5.16-a ", signed by Mr. Álvaro Julián Villagrán García, General Director of said Institution, and by Ms. * XXXXXXXXXXXXXXXXXXXXXXXX with the character of Commissioner of the Audit Committee of said Institution, corresponding to the regularization plan indicated in the preceding numeral, as observed from the received stamp in the registry office of this Commission that appears on the first page of said format.

IX.

Through a written document of September 12, 2016, received in this Commission the following day, signed by Ms. * XXXXXXXXXXXXXXXXXXXXXXXX , with the character of President of the Audit Committee of said Institution, said Insurance Institution presented " Follow-up Report on the Regularization Plan for shortage in the coverage of minimum paid capital for the months of February, March, April, May, June and July 2016, and those that may be presented in August, September and October 2016. " , expressing that said follow-up report was discussed and approved in Session 008/2016 of its Audit Committee; that on August 18, 2016, it sent the regularization plan through the System of Regularization Plans and Self-Correction Programs (SIPREP), which was physically delivered in this Commission the following day, with folio number PRE320-S0116-000009-20160818, and that despite not yet receiving the authorization office from this Commission to the regularization plan, with the intention that this Commission had knowledge of its progress, it made known that in the aforementioned session, it was informed that on August 16, 2016, said Institution had received a proposal for adjustments to the reinsurance contract, which once analyzed, according to the Audit Committee, shows only an additional term of 6 months with respect to the initial 12 months, to defer the corresponding payments, so negotiations continued to achieve the expected savings of $7,600,000.00 by the end of October 2016.

That Insurance Institution on October 14, 2016, presented to this Commission a written document dated October 12, 2016, signed by Ms. * XXXXXXXXXXXXXXXXXXXXXXXX with the character of President of the Audit Committee of said Institution, which contains " Follow-up Report on the Regularization Plan for shortage in the coverage of minimum paid capital for the months of February, March, April, May, June and July 2016, and those that may be presented in August, September and October 2016. " , indicating that despite not yet receiving the authorization office from this Commission to said regularization plan, with the intention that this Commission had knowledge of its progress, it made known that in session 009/2016 of the Audit Committee of said Insurance Institution, it was informed regarding the reactivation of real estate title insurance policies and the development of special products that allow access to massive markets with a low level of insured sum; that two title insurance policies were issued for $38,101.62, and that its General Director had held meetings with groups from both the private and government sectors, interested in the implementation of title insurance as a requirement in the placement of their mortgage credits; that a microinsurance was in approval of this Commission for its registration, and that in relation to negotiations with the reinsurer, it was waiting for the response of the

XI.

On October 18, 2016, that Insurance Institution received Official Document No. 06-C00-22100/29654 dated October 4, 2016, through which the General Directorate of Financial Supervision of this Commission, without objecting to the clarification made by that Insurance Institution when submitting the regularization plan regarding that at March 31, 2016, the amount of its paid minimum capital was $26,945,968.58, resolved "... to authorize the regularization plan aimed at remedying the shortfall in the coverage of the paid minimum capital as of March 31, 2016, understanding that that Institution must take the necessary measures to ensure that the stated actions are sufficient to remedy said shortfall, and those that may arise during its validity, and consider the capital contributions that, if necessary, result in locating its statutory parameters within solvency ranges. Likewise, it is indicated to it that the ninety (90) natural days deadline to remedy said irregularity began on August 19, 2016, the date on which that Institution presented the regularization plan required in Official Document No. 06-C00-22100/15956 ... the foregoing, independent of the procedure that is carried out based on article 477 of the Law of Insurance and Surety Institutions, for the shortfalls in the paid minimum capital corresponding to the months of February, April, May, June, and July 2016".

XII.

Based on articles 9, first paragraph, 304 to 309, and 389 of the Law of Insurance and Surety Institutions, the General Directorate of Financial Supervision of this Commission, through Official Document No. 06-C00-22100/32355 of November 7, 2016, received by that Insurance Institution on the 10th of the same month, requested that it carry out the monthly submission of the Regulatory Report on Financial Statements, RR-7, starting from the month of October 2016 and subsequent months, in accordance with provision 38.1.8 and Annex 38.1.8 of the Single Insurance and Surety Circular; likewise, as a complement to said submission, it also requested that it monthly present the Regulatory Report on Assets and Investments, RR-5, described in provision 38.1.6 and Annex 38.1.6 of said Circular.

XIII.

That Insurance Institution presented to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to September 30, 2016, determining a shortfall in the coverage of paid minimum capital of $12,899,095.80, as follows:

Coverage of Paid Minimum Capital

Paid Computable Capital
$14,613,399.06

Paid Minimum Capital
$27,512,494.86

Surplus or Shortfall
-$12,899,095.80

The presentation of said report was carried out on November 1, 2016, with transaction number 210212, electronically, through the Electronic Information Submission System (SEIVE) in terms of what is provided for in Provision 39.1.5 of the Single Insurance and Surety Circular, published in the Official Gazette of the Federation on December 19, 2014, in force from April 4, 2015, as well as Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Gazette of the Federation on April 1, 2015, and in force from April 4, 2015.

XIV.

By Official Document No. 06-C00-22100/33271 of November 16, 2016, received by that Insurance Institution on the 18th of the same month as observed from the seal on the front of the first page of said official document, the General Directorate of Financial Supervision of this Commission pointed out that as a result of the review of the financial and statutory information contained in the Regulatory Report on Financial Statements RR-7 corresponding to the month of September 2016, that Insurance Institution continued to present a shortfall in the coverage of paid minimum capital in the amount of $12,899,095.80, as well as that "... since the deadline granted for compliance with the regularization plan approved through Official Document No. 06-C00-22100/29654, cited above, expired on November 16, 2016, and that as of September 2016 it continues to present a shortfall in the coverage of paid minimum capital, this Commission, based on articles 320 and 389 of the Law of Insurance and Surety Institutions, grants a period of FIVE (5) BUSINESS DAYS, counted from the date of receipt of this official document, to prove compliance with the aforementioned regularization plan".

XV.

By written document of November 25, 2016, signed by Mr. Álvaro Julián Villagrán García, General Director, and President of the Board of Directors of that Institution, received in this Commission on the same day, that Insurance Institution responded to Official Document No. 06-C00-22100/33271 mentioned in the preceding paragraph, and indicated compliance with the regularization plan in question, according to the actions stated in said plan, as highlighted below:

That the progress achieved to the date of its stated written document is that Sociedad Hipotecaria Federal, SNC, (SHF), "... has signed a commitment letter dated October 14, 2016, which explains itself and has included as a requirement in its list of requirements for granting its credits the real estate title insurance ...", and that on November 23, 2016, that Institution was informed that the first insurance policy operation would be assigned to it in the following days from that date, to initiate the process and its validation, and that once the first policy is achieved, it would institutionalize the process.

That it had held multiple meetings with INFONAVIT, obtaining a favorable resolution from four of the six areas that approve, validate, and authorize the contracting of property title insurance, so that there were still weeks or perhaps months left before starting the sale of the microinsurance, and that personnel of that Institution were carrying out analysis work and drafting the technical note and contractual documentation for that product.

That they had held talks with the *
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, who in turn is * XXXXXXXXXXXXXXXXXXXXXXXXXXX, who "... has viewed the real estate title insurance with a good level of profitability and acceptance and has begun efforts to institutionalize that insurance in the Mexican mortgage banking sector."

That it achieved the renegotiation of the excess loss reinsurance contract having confirmation from * XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX dated September 30, 2016, for the extension of 6 months of the coverage period for the reinsurers and the adjustment to the payment schedule, which that Institution states represented a decrease in the cost of that contract as of September 2016 of $2,186,708.33, so that the shortfall in the coverage of paid minimum capital as of September 2016 was reduced from $15,085,804.10 to $12,899,095.80, representing a 14.49% reduction in the amount of the shortfall at that date.

That as of the date of the written document in question, November 25, 2016, it was not possible for the shareholders to provide sufficient resources to cover the shortfalls in the coverage of paid minimum capital from February to October 2016, because based on the expected figures in the sale of insurance with SHF and other institutions, "... said shareholders will schedule the contribution of sufficient capital, as well as negotiations are being carried out with investors who have a firm interest in subscribing and paying capital of NEZTER and thereby undoubtedly remedy the problem of shortfalls in the coverage of paid minimum capital that this Institution is going through."

XVI.

That Insurance Institution presented to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to October 31, 2016, determining a shortfall in the coverage of paid minimum capital of $15,082,593.54, as follows:

Coverage of Paid Minimum Capital

Paid Computable Capital
$12,429,901.32

Paid Minimum Capital
$27,512,494.86

Surplus or Shortfall
-$15,082,593.54

The presentation of said report was carried out on November 23, 2016, with transaction number 212178, electronically, through the Electronic Information Submission System (SEIVE) in terms of what is provided for in Provision 39.1.5 of the Single Insurance and Surety Circular, published in the Official Gazette of the Federation on December 19, 2014, and in force from April 4, 2015, as well as Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Gazette of the Federation on April 1, 2015, and in force from April 4, 2015.

XVII. The General Directorate of Financial Supervision of this Commission through Official Document No. 06-C00-22100/34690 of December 6, 2016, received by that Insurance Institution on the 9th of the same month, pointed out that as a result of the review of the financial and statutory information contained in the Regulatory Report on Financial Statements (RR-7) corresponding to the month of October 2016, it was observed that that Institution presented a shortfall in the coverage of paid minimum capital of $15,082,593.54, so that "... since the deadline granted for compliance with the regularization plan in reference expired on November 16, 2016, and that as of October 31, 2016 it continues to present a shortfall in the coverage of paid minimum capital, this Commission, based on article 320 of the Law of Insurance and Surety Institutions, grants a period of TEN (10) BUSINESS DAYS, counted from the date of receipt of this official document, to present to this Commission the complementary actions to said plan, which it will adopt to solve the problem consisting of presenting a shortfall in the coverage of paid minimum capital as of March 31, 2016, which must contemplate the capital contributions that result necessary to remedy the shortfalls presented and those that, if any, arise during the period of said actions and regularize its financial situation, in order for the statutory parameters of the investment base of technical reserves, solvency capital requirement, and paid minimum capital, must be duly covered at the end of the reference period.

The foregoing on the understanding that in the case of not presenting said actions within the stated deadline, or that said actions prove insufficient to remedy the problem within the 30 natural days period stated in article 320 of the LAW OF INSURANCE AND SURETY INSTITUTIONS, this Commission will proceed in accordance with what is established in the penultimate paragraph of article 320 referred to above."

XVIII.

That Institution through a written document of January 5, 2017, signed by Mr. Fernando Antonio Martínez Niño as legal representative and Director of Finance of that Institution, received in this Commission on the same day, responded to Official Document No. 06-C00-22100/34690 mentioned above, in which it indicated the following complementary actions to the regularization plan in question:

To immediately begin issuing property title insurance policies in SHF operations. The forecast for this is that SHF will start assigning cases of its mortgage credits to NEZTER and achieve carrying out 3 weekly operations, that is, 12 operations per month, estimating that each operation on average from SHF is equivalent to $60,000,000.00 in insured sum, with this there will be approximately $720,000,000.00 in insured sum each month, which will represent approximately an amount of monthly issuance in issued premiums of $2,500,000.00, with respect to SHF.

Firm commitment to inject resources into the capital of NEZTER up to the amount of $17,500,000.00 to remedy the shortfall in the minimum paid capital as of November 2016 and/or the necessary amount of resources sufficient during the compliance period granted by this Honorable Commission to the complementary actions presented here and regularize the financial situation of this Institution, in order for the statutory parameters of the investment base of technical reserves, solvency capital requirement, and paid minimum capital must be covered at the end of the reference period."

XIX.

That Insurance Institution presented to this Commission the Regulatory Report on Financial Statements, RR-7 corresponding to November 30, 2016, determining a shortfall in the coverage of paid minimum capital of $17,296,946.20, as follows:

Coverage of Paid Minimum Capital

Paid Computable Capital
$10,215,548.66

Paid Minimum Capital
$27,512,494.86

Surplus or Shortfall
-$17,296,946.20

The presentation of said report was carried out on December 20, 2016, with transaction number 213532, electronically, through the Electronic Information Submission System (SEIVE) in terms of what is provided for in Provision 39.1.5 of the Single Insurance and Surety Circular, published in the Official Gazette of the Federation on December 19, 2014, and in force from April 4, 2015, as well as Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Gazette of the Federation on April 1, 2015, and in force from April 4, 2015.

XX.

Through Official Document 06-C00-22100/00715 of January 16, 2017, received by that Insurance Institution on the same day, the General Directorate of Financial Supervision of this Commission pointed out that as a result of the review of the financial and statutory information contained in the RR-7, with figures as of November 30, 2016, sent by that Institution on December 20, 2016, with transaction number 213532, that Institution continued to present a paid minimum capital shortfall of $17,296,946.20, so that "... after having analyzed the actions proposed by that Institution based on what is provided by article 320 of the LAW OF INSURANCE AND SURETY INSTITUTIONS, this Commission resolves to approve the complementary actions to the regularization plan approved through Official Document 06-C00-22100/29654 mentioned above, consisting of initiating the issuance of property title insurance policies in the operations of Sociedad Hipotecaria Federal (SHF) and carrying out the capital contribution up to $17,500,000.00 and/or the necessary amount of resources in order for the statutory parameters of the investment base of technical reserves, solvency capital requirement, and paid minimum capital remain covered, at the end of the compliance period, on the understanding that the deadline for compliance with said actions cannot exceed THIRTY (30) NATURAL DAYS, counted from the date of receipt of this official document."

XXI.

By Official Document 06-C00-22100/02902 of February 14, 2017, received by that Insurance Institution on the same day, the General Directorate of Financial Supervision of this Commission pointed out that considering that the deadline for compliance with the complementary actions to the regularization plan mentioned above expired on February 14, 2017, and that as of December 2016, that Institution continued to present a shortfall in the coverage of its paid minimum capital of $19,130,882.99, "... this Commission, based on articles 320 and 389 of the LAW OF INSURANCE AND SURETY INSTITUTIONS, grants a period of TWO (2) BUSINESS DAYS, counted from the date of receipt of this official document, to send to this Commission the documentation that accredits compliance with the complementary actions provided for in the regularization plan mentioned above."

XXII. That Insurance Institution presented to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to December 31, 2016, determining a shortfall in the coverage of paid minimum capital of $19,130,882.99, as follows:

Coverage of Paid Minimum Capital

Paid Computable Capital
$8,381,611.87

Paid Minimum Capital
$27,512,494.86

Surplus or Shortfall
-$19,130,882.99

The presentation of said report was carried out on February 22, 2017, with transaction number 222507, electronically, through the Electronic Information Submission System (SEIVE) in terms of what is provided for in Provision 39.1.5 of the Single Insurance and Surety Circular, published in the Official Gazette of the Federation on December 19, 2014, and in force from April 4, 2015, as well as Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Gazette of the Federation on April 1, 2015, and in force from April 4, 2015.

XXIII.

By Official Document 06-C00-22200/08186 of March 2, 2017, received by that Insurance Institution on the 7th of the same month, as evidenced by the receipt acknowledgment observed on the front of the first page of said official document, the General Directorate of Financial Supervision of this Commission ordered an ordinary inspection visit to that Institution.

Regarding this, the visitors of this Commission drew up act number 33, of start of inspection visit, of March 7, 2017, which was partially closed on that same date.

XXIV.

That Insurance Institution presented to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to January 31, 2017, determining a shortfall in the coverage of paid minimum capital of $20,300,500.30, as follows:

Coverage of Paid Minimum Capital

Paid Computable Capital
$7,211,994.56

Paid Minimum Capital
$27,512,494.86

Surplus or Shortfall
-$20,300,500.30

The presentation of said report was carried out on February 22, 2017, with transaction number 222508, electronically, through the Electronic Information Submission System (SEIVE) in terms of what is provided for in Provision 39.1.5 of the Single Insurance and Surety Circular, published in the Official Gazette of the Federation on December 19, 2014, and in force from April 4, 2015, as well as Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Gazette of the Federation on April 1, 2015, and in force from April 4, 2015.

XXV. By Official Document 06-C00-22100/08206 of March 2, 2017, received by that Insurance Institution on the 8th of the same month, as evidenced by the receipt acknowledgment seal on the front of the first page of that official document, the General Directorate of Financial Supervision of this Commission recapitulated that through Official Document 06-C00-22100/29654 of October 4, 2016, the regularization plan presented by that Insurance Institution to remedy the shortfall in the coverage of paid minimum capital as of March 31, 2016, as well as those that might arise during its validity, had been approved, granting it a period of 90 natural days counted from August 19, 2016, the date on which the aforementioned plan was presented, a deadline that expired on November 16, 2016, without that Insurance Institution remedying the stated shortfall, so that through Official Document 06-C00-22100/34690 of December 6, 2016, said General Directorate had requested that Insurance Institution to present complementary actions to the aforementioned plan, which were approved through Official Document 06-C00-22100/00715 of January 16, 2017, granting that Insurance Institution a period of 30 natural days counted from the date of receipt of that official document, a deadline that expired on February 14, 2017.

In that context, in the same Official Document 06-C00-22100/08206 of March 2, 2017, the General Directorate of Financial Supervision of this Commission indicated to that Insurance Institution that as a result of the review of the financial and statutory information contained in the RR-7 as of January 31, 2017, it observed that that Institution continued to present a shortfall in the coverage of paid minimum capital of $20,300,500.30, which is equivalent to 73.8% of said requirement, so it ordered that Insurance Institution to inform the insured about the non-compliance with the regularization plan in question, in the following terms:

"... since the Institution has not re-established the coverage of all solvency parameters, based on the last paragraph of article 320 of the LAW OF INSURANCE AND SURETY INSTITUTIONS, as well as what is stated in Provision 28.1.3 of the Single Insurance and Surety Circular (CUSF), this Commission, in protection of the public interest, orders it to inform its insured about the non-compliance with the regularization plan, through publication in the Official Gazette of the Federation (DOF), in two national circulation newspapers, and on the main page of the electronic portal of that Institution, within a deadline that does not exceed TEN (10) BUSINESS DAYS, counted from the date of receipt of this official document."

XXVI.

By written document of March 9, 2017, received in this Commission on the same day, signed by Mr. Álvaro Julián Villagrán García, as majority shareholder, President of the Board of Directors, and legal representative of that Institution, that Insurance Institution stated, essentially, that it celebrated a debt recognition agreement on January 10, 2017, with Mr. * XXXXXXXXXXXXXXXXXXXX, due to a debt in favor of that Insurance Institution for a total amount of $538,000.00, derived from the provision of investigation, management, legal analysis, boundary regularization, validation before the municipal cadastre of cartography and boundaries, registrations in the Public Property Registry, as well as that it received as payment in kind a property located in the city of Nogales in the state of Sonora, whose value amounts to $70,000,000.00, and appraisal of the same with folio AC-003-03-17 of March 8, 2017, issued by the XXXXXXXXXXXXXXXXXXXXXXXXX, as well as, that it received a cash contribution from Mr. * XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX XXX XX, of $3,000,000.00, actions with which that Institution says it manages to remedy the shortfalls generated in the coverage of paid minimum capital, and generates a surplus in the coverage of paid minimum capital of approximately $50,060,400.00, so in said written document it requests "... to declare terminated the process of non-compliance with the Regularization Plan and its complementary actions generated by the shortfalls in the coverage of its paid minimum capital from February 2016 up to March 2017, and consequently not to continue with the actions related to the revocation of the authorization to operate as an Insurance Institution ...".

XXVII.

By different written document of March 9, 2017, received in this Commission on the 10th of the same month, signed by Mr. Álvaro Julián Villagrán García, in his capacity as General Director and Legal Representative

of that Insurance Institution, that Insurance Institution stated that "... responds to the Notice No. 06-C00-22100/08206 dated March 2, 2017," and refers to "As mentioned in the document submitted to this Honorable Authority on March 9, 2017, regarding compliance with the issue presented by the shortfalls in the coverage of minimum paid-in capital, which has been remedied by virtue of actions executed on the delivery of a property in payment for $70,000,000.00 (seventy million pesos M.N.), as well as the capital increase as a cash contribution of $3,000,000.00 (three million pesos M.N.) which will be made no later than March 20, 2017."

XXVIII.

With information request number 06-C00-22200/08186-2 of March 14, 2017, issued within the inspection visit indicated in ANTECEDENT XXIII, this Insurance Institution was requested, among other information, the original and copy of the accounting records made in connection with the issuance of two promissory notes in which the debt owed to its favor of $538,000.00 was recorded, and in connection with the delivery of a property in payment to settle said debt, referred to in paragraphs XXVI and XXVII preceding.

XXIX.

In response to the aforementioned request 06-C00-22200/08186-2 of March 14, 2017, with a document dated March 17, 2017, signed by Mr. Álvaro Julián Villagrán García, General Director of that Insurance Institution, it provided journal vouchers numbers 22 and 24, dated April 22 and October 10, 2016, respectively, through which it retroactively recorded two promissory notes for $330,000.00 and $208,000.00, respectively, totaling $538,000.00, affecting asset account 1625.- Documents Receivable and results in account 6506.- Other Income.

Likewise, it provided journal voucher number 12, dated January 10, 2017, with which it recorded the cancellation of the amount of $538,000.00 from account 1625.- Documents Receivable against account 6506.- Other Income and recorded in account 1630.- Other Debtors the "Unilateral Recognition of Debt," indicated in ANTECEDENT XXVI preceding, which that Institution celebrated with Mr. *XXXXXXXXXXXXXXXXXXXXX, against account 6506.- Other Income for $538,000.00.

In the same way, the Institution provided journal voucher 2, dated March 8, 2017, through which it accountingly recognizes in account 1803.- Adjudicated Assets an amount of $70,000,000.00 against 1630.- Other Debtors for $538,000.00, and results in account 6506.- Other Income for $69,462,000.00.

XXX. Through notice 06-C00-22100/10356 of March 17, 2017, received by that Insurance Institution on the same day, as evidenced by the receipt stamp on the front of the first page of said notice, the General Directorate of Financial Supervision of this Commission stated that since, by the due date of the cited regularization plan, that Institution did not prove its compliance, in accordance with what is established in Article 320 of the Law of Insurance and Sureties Institutions, it confirmed to that Insurance Institution the non-compliance with the indicated regularization plan, and reiterated its obligation to inform its insured parties about said non-compliance, regardless of the actions that that Institution indicated in its two documents of March 9, 2017, had carried out, as well as the analysis that said General Directorate would carry out regarding those actions, and the measures that, if applicable, would be appropriate.

XXXI.

That Insurance Institution submitted to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to February 28, 2017, determining a shortfall in the coverage of minimum paid-in capital of $22,094,950.44, as follows:

Coverage of Minimum Paid-in Capital

Computable Paid Capital
$5,417,544.44

Minimum Paid-in Capital
$27,512,494.86

Surplus or Shortfall
-$22,094,950.44

The submission of said report was made on March 22, 2017 with transaction number 224977, electronically, through the Electronic Information Sending System (SEIVE) in terms of what is provided by Provision 39.1.5 of the Unified Circular of Insurance and Sureties, published in the Official Gazette of the Federation on December 19, 2014 and in force from April 4, 2015, as well as Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Gazette of the Federation on April 1, 2015 and in force from April 4, 2015.

XXXII.

By document of March 29, 2017, signed by Mr. Fernando Antonio Martínez Niño, in his capacity as Director of Finance and Administration of that Institution, and legal representative, received in this Commission on the same day, that Insurance Institution states that:

"... has prepared the corresponding notice whose publication will be carried out in two newspapers of national circulation on tomorrow's day, March 30, 2017. Likewise, the necessary steps are being taken to carry out its publication in the Official Gazette of the Federation; and today it will be published on the main page of the electronic Internet portal of this Institution in the terms indicated in Provision 28.1.4 of the CUSF, in relation to Article 320 of the LAW OF INSURANCE AND SURETIES INSTITUTIONS.

" Once the publications referred to are carried out, a copy of them will be sent to this Honorable Commission. "

XXXIII.

By document of March 31, 2017, signed by Mr. Fernando Antonio Martínez Niño, in his capacity as Director of Finance and Administration of that Institution, and legal representative of the same, that Insurance Institution informed the General Directorate of Financial Supervision of this Commission that on March 29, 2017 it published the non-compliance with the regularization plan on the electronic portal of that Insurance Institution; on March 30, 2017, in the newspapers "El Economista" and "El Financiero"; and, on April 5, 2017, in the Official Gazette of the Federation, providing photocopies of the same. "

XXXIV.

By notice 06-C00-42200/18918 of May 4, 2017, notified to the Insurance Institution on the same day, as evidenced by the respective receipt, the General Directorate of Contencious Legal and Sanctions of this Commission summoned the Insurance Institution because it probably contravened what is established in Article 49 of the Law of Insurance and Sureties Institutions, and other applicable legal provisions, in the sense of not having duly covered the minimum paid-in capital, likely falling into the causal scenario for revocation of its authorization provided for in Article 332, Section II, of the Law of Insurance and Sureties Institutions.

In the chapter of CONSIDERATIONS of the summoning notice, the following were formulated:

" FIRST.- The First Transitory Provision of the Law of Insurance and Sureties Institutions determines that said Law "... will enter into force seven hundred thirty natural days following the publication of the DECREE BY WHICH THE LAW OF INSURANCE AND SURETIES INSTITUTIONS IS ISSUED AND VARIOUS PROVISIONS OF THE LAW ON THE INSURANCE CONTRACT ARE REFORMED AND ADDED to the Official Gazette of the Federation ...", Decree published in said official dissemination medium on April 4, 2013, so that the start of validity of the aforementioned Law of Insurance and Sureties Institutions was April 4, 2015.

" Likewise, the Eighth Transitory Provision of the aforementioned Law of Insurance and Sureties Institutions provides that in terms of Articles 332, 333, and 363 of said Law, this National Commission of Insurance and Sureties will correspond, in substitution of the Secretariat of Finance and Public Credit, to exercise the faculty to revoke those authorizations for the organization and operation of insurance institutions, surety institutions, and mutual insurance societies, which have been granted by said Secretariat.

" This National Commission of Insurance and Sureties, through its General Directorate of Contencious Legal and Sanctions, is competent to issue this summons to a sanctioning administrative procedure, based on what is established by Articles 90 of the Political Constitution of the United Mexican States; 1, 2, Section I, 17, 26, and 31, Section VIII, of the Organic Law of the Federal Public Administration; 2, subsection D, Section III, 98-B, and 98-C of the Internal Regulation of the Secretariat of Finance and Public Credit; in relation to Articles 1, 2, Sections VI, and XIX, 5, 11, first paragraph, 320, 332, Section II, 334, 366, first and second paragraphs, Sections I, VIII, and XIX, 367, first paragraph, Sections I, II, III, and IV, 369, Sections II and VII, 477, 479, and Eighth Transitory Provision of the Law of Insurance and Sureties Institutions, published in the Official Gazette of the Federation on April 4, 2013; in relation to Articles 1, 2, 3, 4 Sections I, II, III, subsection b), IV, subsection h), 6, 11 Sections II, and IX, and 36 Section V, of the Internal Regulation of the National Commission of Insurance and Sureties, published in the Official Gazette of the Federation on June 3, 2015; in relation to Point Unique, Section I, subsection b), and Section III, subsection b) of the Agreement of the Board of Directors of the National Commission of Insurance and Sureties by which the administrative units of the National Commission of Insurance and Sureties are organically assigned, published in the Official Gazette of the Federation on July 3, 2015; and Points Sixteenth, subsection a), and Twenty-second of the Agreement of the Board of Directors of the National Commission of Insurance and Sureties by which powers in matters of sanctions and resources are delegated to the President and other public servants of said Commission, published in the Official Gazette of the Federation on July 10, 2015.

" SECOND.- Article 320, paragraphs first to fifth, of the Law of Insurance and Sureties Institutions, determines that this Commission, when it detects that the financial situation of an Institution presents a shortfall, among other solvency parameters, in the minimum paid-in capital, will grant a term of fifteen business days to the institution that finds itself in the indicated case, in order to submit to this Commission a regularization plan to reestablish the coverage of said parameter, in which a term must be established, which does not exceed ninety days counted from the business day following the date on which the aforementioned term of fifteen business days concludes.

" In accordance with what is established in ANTECEDENTS V to XV, substantially:

" a)
That Insurance Institution in the Regulatory Report on Financial Statements, RR-7, corresponding to March 31, 2016, submitted to this Commission on May 2, 2016, determined a shortfall in the coverage of its minimum paid-in capital of $3,338,403.68.

" b)
The General Directorate of Financial Supervision of this Commission, as a result of the review of the Regulatory Report on Financial Statements, RR-7, corresponding to March 31, 2016, determined a probable shortfall in the coverage of minimum paid-in capital of $3,904,929.96.

" c)
By virtue of the indicated determination of probable shortfall, the General Directorate of Financial Supervision of this Commission, through notice No. 06-C00-22100/15956 of July 29, 2016, received by that Insurance Institution on August 1, 2016, required it to submit to the approval of this Commission a regularization plan to remedy the shortfall in the coverage of minimum paid-in capital at March 31, 2016, determined for that Institution in the amount of $3,904,929.96.

" Now then, that conduct probably contravenes Article 49 of the Law of Insurance and Sureties Institutions, in relation to what is established in Chapter "6.1.- Of the Minimum Paid-in Capital", of the Unified Circular of Insurance and Sureties, published in the Official Gazette of the Federation on December 19, 2014, and in relation to Annex 6.1.2 of the cited Circular, published on March 30, 2015 in that official newspaper, legal and administrative provisions that entered into force on April 4, 2015, in accordance with the First, Fourth, and Sixth Transitory Provisions of the Law of Insurance and Sureties Institutions as well as the First Transitory Provision of the cited Circular which establishes that "These Provisions will enter into force on April 4, 2015".

According to Section IV, subsection a) of the aforementioned Annex 6.1.2, published on March 30, 2015, in relation to the third paragraph of Article 49 of the Law of Insurance and Sureties Institutions, the minimum paid-in capital with which insurance institutions that have authorized a branch of damage operations must count will be equivalent to 5,112,730 Investment Units (UDIS) which will be calculated by multiplying the number of UDIS determined for each authorized operation or branch by the value of the Investment Unit corresponding to December 31 of the immediately preceding year, that is, to December 31, 2014 as announced by the Bank of Mexico, so that if the value of the Investment Unit in pesos at December 31, 2014, as published by the Bank of Mexico in the Official Gazette of the Federation on December 24, 2014, was $5.270368, then, the result of multiplying this value by 5,112,730 Investment Units yields that the minimum paid-in capital that Insurance Institutions authorized to practice a single branch of damage operations, such as the case of that insurance institution that has authorization to operate only the branch of various damage operations, must have at March 31, 2016, is $26,945,968.58.

" It is not omitted to note that the "Agreement by which the minimum paid-in capital with which institutions must count for each operation or branch they have authorized is determined", issued by the Secretariat of Finance and Public Credit, published in the Official Gazette of the Federation on March 24, 2015, was in force, in accordance with the Fourth Transitory Provision of the Law of Insurance and Sureties Institutions, until before April 4, 2015, date on which the aforementioned Annex 6.1.2 of the indicated Circular entered into force, published on March 30, 2015 in that official newspaper, with the circumstance that the content of that Agreement coincides with that of this Annex.

" d)
On August 18, 2016, through the Regularization Plans and Self-Correction Programs System (SIPRED), with folio number PRE320-S011-000009-20160818, that Insurance Institution, sent to this Commission "Format for sending the Regularization Plans referred to in Article 320 of the Law of Insurance and Sureties Institutions, Annex 39.5.16-a", indicating in the section of "Diverse Clarifications": "... that the amount that was recorded in the RR-7 at March 31, 2016 of the minimum paid-in capital by this Institution of $26,945,968.58 ... is applicable to that date and not the one that cites that Honorable Commission in its notice No. 06-C00-22100/15956 since the value of the Investment Units that the Authority considered is applicable after May 31, 2016, date on which Circular Modificatory 10/16 of the Unified Circular of Insurance was published in the Official Gazette of the Federation and consequently it is not applicable for the figures recorded by that Institution in the RR-7 at March 31, 2016"; and, submitted for the approval of this Commission through said format, a regularization plan regarding the irregularities that motivated the request of the same by this Commission, with the circumstance that on August 19, 2016 it presented to this Commission the paper printout of that format.

" e)
By documents of September 12 and October 12, both of 2016, received in this Commission on September 13 and October 14, 2016, respectively, that Institution made various statements about what it considered advances in the execution of the regularization plan, but without proving that it had remedied the shortfall.

" f)
From what is referred to in subsections a) to e) preceding, it is appreciated that that Insurance Institution when presenting the Regulatory Report on Financial Statements, RR-7, corresponding to March 31, 2016, expressly determined having a shortfall in the coverage of its minimum paid-in capital at that date, for $3,338,403.68; that upon attending the request for a regularization plan formulated by the General Directorate of Financial Supervision of this Commission through notice No. 06-C00-22100/15956 of July 29, 2016, that Insurance Institution when submitting for the approval of this Commission in the respective format the indicated regularization plan, through the Regularization Plans and Self-Correction Programs System (SIPRED) on August 18, 2016 with folio number PRE320-S011- 000009-20160818 as well as presenting to this Commission on August 19, 2016 the paper printout of that format, expressly recognized the existence of the shortfall, specifying that it was for the indicated amount of $3,338,403.68 and even reiterated that recognition in its aforementioned documents of September 12 and October 12, both of 2016, in which that Institution made various statements about what it considered advances in the execution of the regularization plan, but without proving that it had remedied the shortfall.

" g)
The General Directorate of Financial Supervision of this Commission, delivered to that Institution on October 18, 2016, notice No. 06-C00-22100/29654 of October 4, 2016, by which after having analyzed the arguments exposed by the same when submitting for approval the regularization plan, resolved "... authorize the regularization plan tending to remedy the shortfall in the coverage of the minimum paid-in capital at March 31, 2016, understanding that, that Institution must take the necessary measures to guarantee that the indicated actions are sufficient to remedy said shortfall, and those that may arise during its validity and consider the capital contributions that, if applicable, are necessary to locate its statutory parameters within the solvency ranges. Likewise, it is indicated to it that the term of ninety natural days to remedy said irregularity began from August 19, 2016, date on which that Institution presented the regularization plan required in notice No. 06-C00-22100/15956 ... the above, independent of the procedure that will be carried out based on Article 477 of the Law of Insurance and Sureties Institutions, for the shortfalls in the minimum paid-in capital corresponding to the months of February, April, May, June, and July 2016".

" h)
That Insurance Institution on November 1, 2016, as indicated in ANTECEDENT XIII, presented to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to September 30, 2016, determining a shortfall in the coverage of minimum paid-in capital of $12,899,095.80, with the circumstance that the General Directorate of Financial Supervision of this Commission through notice No. 06-C00-22100/33271 of November 16, 2016, determined that that Insurance Institution continued presenting the indicated shortfall of $12,899,095.80 at September 30, 2016, and indicated that, in addition, the term for compliance with the regularization plan had expired on the same date of the indicated notice, that is, November 16, 2016, granting it five business days, from the date of receipt of said notice, November 16, 2016, to prove its compliance, and with the circumstance that that shortfall at September 30, 2016, shows a deterioration of its financial situation greater than that reported as corresponding to March 31, 2016.

" Now then, it is to be indicated that in accordance with Article 49, second paragraph, of the Law of Insurance and Sureties Institutions, and Annex 6.1.2, of the Unified Circular of Insurance and Sureties, published on May 31, 2016 in the Official Gazette of the Federation, as part of Circular Modificatory 10/2016 of the cited Unified Circular of Insurance and Sureties, as provided by the UNIQUE Transitory Provision of said modifying Circular, from June 1, 2016, the minimum paid-in capital with which insurance institutions must count is governed by what is established in said Annex published on May 31, 2016.

" According to Section IV, subsection a) and the last paragraph of the aforementioned Annex 6.1.2, published on May 31, 2016, in relation to the third paragraph of Article 49 of the Law of Insurance and Sureties Institutions, the minimum paid-in capital with which insurance institutions that have authorized a branch of damage operations must count will be equivalent to 5,112,730 Investment Units (UDIS) which will be calculated by multiplying the number of UDIS determined for each authorized operation or branch by the value of the Investment Unit corresponding to December 31 of the immediately preceding year, that is, to December 31, 2015 as announced by the Bank of Mexico, so that if the value of the Investment Unit in pesos at December 31, 2015, as published by the Bank of Mexico in the Official Gazette of the Federation on December 24, 2015, was $5.381175, then, the result of multiplying this value by 5,112,730 Investment Units yields that the minimum paid-in capital that Insurance Institutions authorized to practice a single branch of damage operations, such as the case of that insurance institution that has authorization to operate only the branch of various damage operations, must have from May 31, 2016, is $27,512,494.86 until this Commission modifies it.

" i)
That Insurance Institution on November 23, 2016, as indicated in ANTECEDENT XVI, presented the Regulatory Report on Financial Statements, RR-7, corresponding to October 31, 2016, determining a shortfall in the coverage of minimum paid-in capital of $15,082,593.54, showing a deterioration of its financial situation greater than that reported as corresponding to September 30, 2016.

" j)
By document of November 25, 2016, received in this Commission on the same day, that Institution indicated that it was complying with the regularization plan required by this Commission, but without proving that compliance.

" k)
From what is referred to in subsections h) to j) preceding, it is appreciated that that Insurance Institution when presenting the Regulatory Report on Financial Statements, RR-7, corresponding to September 30, 2016, expressly determined having a shortfall in the coverage of its minimum paid-in capital at that date, for $12,899,095.80, showing a deterioration of its financial situation greater than that reported as

corresponding to March 31, 2016; that the General Directorate of Financial Supervision of this Commission in the aforementioned letter No. 06-C00-22100/33271 of November 16, 2016, in addition to determining that said Insurance Institution continued to present the aforementioned shortfall of $12,899,095.80 as of September 30, 2016, stated that the deadline for compliance with the regularization plan had expired on the same date as the indicated letter, that is, November 16, 2016, granting said Insurance Institution five business days, from the date of receipt of said letter, November 16, 2016, to prove its compliance; that upon submitting the Regulatory Report on Financial Statements, RR-7, corresponding to October 31, 2016, said Insurance Institution expressly determined that it had a shortfall in the coverage of its minimum paid-in capital as of that date, by $15,082,593.54, reporting a deterioration of its financial situation greater than that reported as corresponding to September 30, 2016; that said Insurance Institution in its writing of November 25, 2016, received by this Commission on the same day, expressly acknowledged having a shortfall in the coverage of its minimum paid-in capital by stating that it was complying with the regularization plan required by this Commission, but without accrediting such compliance.

" THIRD.- Article 320, eighth paragraph of the Law of Insurance and Surety Companies, establishes that, "... if once the period granted within the regularization plan has elapsed, the Institution in question has not restored the indicated coverage, this Commission will grant the Institution a period of ten days from the date of notification, for it to expose what it deems appropriate for its rights and submit for its approval the complementary actions it will adopt to remedy the determined problem within a period that cannot exceed thirty days, counted from the date on which said actions had been approved by this Commission. "

" In accordance with the provisions of the aforementioned article 320, eighth paragraph, of the Law of Insurance and Surety Companies, the General Directorate of Financial Supervision of this Commission through letter No. 06-C00-22100/34690 of December 6, 2016, received by said Institution on the 9th of the same month, observed that in view of the shortfall in the coverage of minimum paid-in capital of $15,082,593.54, as of October 30, 2016, presented by said Insurance Institution, and in view of the expiration, on November 16, 2016, of the period granted for compliance with the regularization plan, it granted said Insurance Institution a period of ten business days, counted from the date of receipt of said letter, for said Institution to present to this Commission the complementary actions to said plan, understanding that if they are not presented within the stated period, or if they prove insufficient to remedy the problem within the period of 30 natural days indicated in the aforementioned article 320, this Commission would proceed in accordance with what is established in the penultimate paragraph of said legal provision, that is, the procedure for revocation of authorization to operate as an insurance institution would begin.

" Now, the referred period granted of ten business days for the presentation of complementary actions to the Regularization Plan, in accordance with article 320, eighth paragraph of the Law of Insurance and Surety Companies, elapsed from December 9, 2016, to January 5, 2017, the above, discounting as non-working days December 21, 22, 23, 26, 27, 29, 29 and 30 of 2016, as well as also the days 02 and 03 of January 2017, in terms of what is provided in the Modifying Circular 24/16 of the Single Insurance and Surety of November 25, 2016, published in the Official Journal of the Federation on December 7, 2016, through which the days on which this Commission suspended its work due to the vacation period of its employees were made known, and to the " Decree by which Article Second of the Decree by which the Official Calendar is established is reformed ", published in the Official Journal of the Federation on January 27, 2006.

" Said Insurance Institution on December 20, 2016, as indicated in ANTECEDENT XIX, presented to this Commission the Regulatory Report on Financial Statements, RR-7, corresponding to November 30, 2016, determining a shortfall in the coverage of minimum paid-in capital of $17,296,946.20, reporting a deterioration of its financial situation greater than that reported as corresponding to October 31, 2016.

" Said Institution through writing of January 5, 2017, received by this Commission on the same day, in attention to the aforementioned letter 06-C00-22100/34690 of December 6, 2016, proposed the complementary actions to the regularization plan requested, thus recognizing that it could not remedy the shortfalls in its minimum paid-in capital within the validity of said regularization plan.

" Through letter 06-C00-22100/00715 of January 16, 2017, received by said Institution on the same day, the General Directorate of Financial Supervision of this Commission, stated that as a result of the review of the financial and statutory information contained in the indicated RR-7 with figures as of November 30, 2016, sent by said Institution, it continued to present a shortfall of minimum paid-in capital by $17,296,946.20, as well as that once the complementary actions proposed by said Insurance Institution were analyzed, it approved them, understanding that the period for compliance with said actions could not exceed thirty natural days, counted from the date of receipt of said letter.

" Through letter 06-C00-22100/02902 of February 14, 2017, received by said Institution on the same day, the General Directorate of Financial Supervision of this Commission, stated that considering that the period of thirty days for compliance with the complementary actions expired that day, and that as of December 2016, according to the information presented by the same, said Institution continued with a shortfall in the coverage of its minimum paid-in capital by $19,130,882.99, it granted two business days, from the date of receipt of that letter for said Institution to send to this Commission the documentation that accredited the compliance with the complementary actions provided for in the stated plan, a period of two days that elapsed from February 14 to 15, 2017, without said Institution informing this Commission of the requested information, being obvious to this Commission, that contrary to the shortfall being remedied or reduced with the complementary actions that said Institution indicated it was carrying out, said shortfall was increasing, despite the regularization plan and its complementary actions approved for that effect.

" Said Insurance Institution on February 22, 2017, as indicated in ANTECEDENT XXII, presented the Regulatory Report on Financial Statements, RR-7, corresponding to December 31, 2016, determining a shortfall in the coverage of its minimum paid-in capital of $19,130,882.99, reporting a deterioration of its financial situation greater than that reported as corresponding to November 30, 2016, with which said Institution confirmed and accepted the magnitude of the shortfall observed by the General Directorate of Financial Supervision of this Commission in the aforementioned letter 06-C00-22100/02902 of February 14, 2017, received by said Institution on the same day.

" FOURTH.- As indicated in ANTECEDENTS XXVI and XXVII, through two writings dated March 9, 2017, one of which was received by this Commission on that same date, and another of which was received by this Commission on March 13 of said month, said Institution stated, essentially, that for a debt in its favor, for an amount of $538,000.00, it received as payment in kind the property that describes, and exhibited an appraisal of the same for $70,000,000.00, with folio AC-003-03-17, issued on March 8, 2017 by the * XXXXXXXXXXXXXXXXXXXXXXXXX and stated that it would receive a cash contribution of $3,000,000.00, from Mr. * XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXX XXX XXXXXXXXXXXXXXXXXXX , with which, according to its statement, it managed to remedy the shortfall in its coverage of the minimum paid-in capital, even generating a surplus in the same, asking this Commission, to terminate the non-compliance process with the regularization plan and its complementary actions.

" As indicated in ANTECEDENT XXIX, by writing of March 17, 2017, said Insurance Institution provided the information requested by the General Directorate of Financial Supervision of this Commission, through letter 06-C00-22200/08186-2 of March 14, 2017, within the ordinary inspection visit carried out on said Institution, according to the visit order contained in letter 06- C00-22200/08186 of March 2, 2017, information consisting of original and copy of the accounting records made as a result of the issuance of two promissory notes in which the debt in its favor of $538,000.00 was recorded and as a result of the payment in kind of a property to settle said debt.

" From the analysis of the information and documentation presented by said Institution with its aforementioned writings of March 9, 2017, the General Directorate of Financial Supervision of this Commission regarding the acquisition of the property described in ANTECEDENT XXVI and regarding its appraisal with folio number AC-003-03-17, observed:

" a)

That the acquisition of said property does not meet the requirements set forth in fractions XVI and XVII of article 118 and in article 134 of the Law of Insurance and Surety Companies, in which it is established, respectively, that Insurance Institutions may only carry out, among other operations, acquire, construct and administer social interest housing and urban properties of regular products; as well as, acquire the movable and immovable property necessary for the realization of its corporate purpose; considering urban properties of regular products, those that generate a product derived from their lease to third parties and those that, even if they are used for the own use of the Insurance Institutions, consider an imputed rent calculated based on an appraisal of fair rent valuation that a credit institution or public broker carries out for that effect, which must be updated annually.

" b)

That the appraisal of said property does not comply with what is stated in Provision 8.5.1 of the Single Insurance and Surety Circular, in which it indicates that the value of real estate investments that Institutions and Mutual Societies make will be estimated by the average of the physical and capitalization values of rents, according to the appraisals carried out by experts from credit institutions or public brokers in accordance with the applicable provisions.

" c)

That the non-compliance indicated with the legal and administrative provisions mentioned is due to the following:

" 1.

In the presented appraisal it is observed that said property is a rustic land.

" 2.

The property in reference is not an urban property of regular products, because the presented appraisal indicates that it is a plot of rustic land.

" 3.

The presented appraisal is not an appraisal of fair rent valuation, because the same, in section X. Summary of Values, indicates that the rent approach (rent capitalization) does not apply.

" 4.

The property is not leased, nor is it for own use that considers an imputed rent. The above, in virtue of the fact that the same appraisal states, in section IV. General Description of the Property, that it is a rural land invaded to solve a housing problem.

" 5.

Finally, the responsible appraiser of the property appraisal, the * Ing. Francisco Javier Gallego Valenzuela, is not registered on the internet page http://www.correduriapublica.gob.mx/ correduria/?P=3 of the Secretariat of Economy.

" 6.

Additionally, public deed number 4,316, which contains the payment in kind made in favor of Nezter, in which, in the section Antecedents of said deed, point " FOUR.- ENCUMBRANCES " indicates that the property reports marginal annotations, which Mr. Álvaro Julián Villagrán García recognizes and accepts on behalf of said Institution, without giving details of the same.

" d)

That the rustic land in reference is located in the situation indicated in article 294, fraction X, in which it is determined that insurance institutions are prohibited from " Acquiring goods, titles or values that they should not keep in their assets. " .

" e)

That the capital contribution in cash that Mr. * XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX intends to make, for an amount of $3 ' 000,000.00, is not sufficient to remedy the shortfall of minimum paid-in capital.

" To further elaborate, from the analysis of the information and documentation presented by said Institution with its aforementioned writing of March 17, 2017, the General Directorate of Financial Supervision of this Commission regarding the aforementioned appraisal with folio number AC-003-03-17, observed that: policy 2 of the daily journal, of March 8, 2017, through which said Institution recognizes accountingly in account 1803.- Adjudicated Assets an amount of $70,000,000.00 against 1630.- Various Debtors for $538,000.00, and in results in account 6506.- Other Income for $69,462,000.00, concluding, that the records related to said policy, are incorrect, in reason that the accounting criteria to whose observance said Institution is bound indicated in article 296 of the Law of Insurance and Surety Companies, and the " TITLE 22. OF ACCOUNTING AND FINANCIAL STATEMENTS ";

" CHAPTER 22.1. OF THE ACCOUNTING CRITERIA FOR THE ESTIMATION OF ASSETS AND LIABILITIES OF INSTITUTIONS AND MUTUAL SOCIETIES ", provision 22.1.2, Series II ,

" Criteria relative to the specific concepts of insurance and surety operations ", subsection o) Adjudicated Assets (B-15), of the Single Insurance and Surety Circular, published in the Official Journal of the Federation on December 19, 2014, and its Annex " 22.1.2. ACCOUNTING CRITERIA APPLICABLE TO INSTITUTIONS, MUTUAL SOCIETIES AND HOLDING COMPANIES " Series II , " Criteria relative to the specific concepts of insurance and surety operations ", subsection " o) Adjudicated Assets (B-15) ", subsection (8), published in the aforementioned Official Journal of the Federation on March 23, 2015, and which entered into force on April 4, 2015, establishes that:

" When the value of the asset that gave rise to the adjudication net of estimates was lower than the value of the adjudicated asset, the value of the latter must be adjusted to the net value of the asset " , that is, said Institution should only have carried out a reclassification of $538,000.00, from the account of Various Debtors to the account of Adjudicated Assets, without affecting results.

" The above in virtue of subsection (9) of the aforementioned Annex 22.1.2, Series II, subsection o) Adjudicated Assets (B-15),

in which it states, that " At the time of the sale of the Adjudicated Assets, the difference between the sale price and the Book Value of the adjudicated asset, net of estimates, must be recognized in the results of the exercise as other income (expenses) of the operation " , that is, that it can only recognize the profit when the property is sold, a situation that to date, has not occurred.

" Said Insurance Institution on March 22, 2017, as indicated in ANTECEDENT XXIV, presented the Regulatory Report on Financial Statements, RR-7, corresponding to January 31, 2017, determining a shortfall in the coverage of its minimum paid-in capital of $20,300,500.30, reporting a deterioration of its financial situation greater than that reported by $19,130,882.99, as corresponding to December 31, 2016, with which said Institution confirmed and accepted the shortfall, this last amount also observed by the General Directorate of Financial Supervision of this Commission in the aforementioned letter 06-C00-22100/02902 of February 14, 2017, received by said Institution on the same day.

" FIFTH.- The
article 320, tenth paragraph, of the Law of Insurance and Surety Companies, establishes, among others, that this Commission independently of the sanctions that may be imposed, may in protection of the public interest order the Institution in question, to inform its policyholders about the non-compliance with the regularization plan in the form and terms that the Commission itself determines.

" The General Directorate of Financial Supervision of this Commission, by letter 06-C00-22100/08206 of March 2, 2017, indicated in ANTECEDENT XXV, stated that as of January 31, 2017, said Institution continued to present a shortfall in the coverage of minimum paid-in capital, by $20,300,500.30, and ordered said Institution, to inform its policyholders of the non-compliance with the regularization plan, within a period that did not exceed ten business days, counted from the date of receipt of said letter 08206, that is, from March 8 to 23, 2017, without said Institution attending to said order within the referred period, including that General Directorate by letter 06-C00-22100/10356 of March 17, 2017, received by said Institution on the same day, reiterated said order in view of the non-compliance to that date of the obligation indicated.

" In that sense, by writing of March 29, 2017, received on the same day, already expired the legal period that the General Directorate of Financial Supervision granted to said Institution to comply with the order to inform its policyholders of the non-compliance with the regularization plan, said Institution stated that it was preparing the corresponding notices, and through writing of March 31, 2017, it informed said General Directorate that it published the non-compliance with the regularization plan, on its electronic portal on March 29, 2017; on March 30, 2017, in the newspapers " El Economista " , and " El Financiero " , as well as, on April 5, 2017, in the Official Journal of the Federation, providing a photocopy of said publications, notice of non-compliance whose wording is as follows:

"" In accordance with the last paragraph of article 320 of the Law of Insurance and Surety Companies (LISF) and to Provisions 28.1.3 and 28.1.4 of the Single Insurance and Surety Circular, it is made known to you, that, in protection of the public interest, the National Commission for the Protection and Defense of Financial Services Users ordered Nezter Seguros, S.A. de C.V., to make known to its policyholders, the non-compliance with the Regularization Plan with Folio Number: PRE320-S0116-000009-20160818, approved by said Honorable Commission on October 4, 2016 through letter No. 06-C00-22100/29654, required by said same authority through Letter No. 06-C00-22100/15956 of date July 29 2016, for the shortfall in the coverage of the Minimum Paid-in Capital corresponding to the close of March 2016, for an amount of $3,338,403.68.

" Granting a period of 90 natural days, counted from August 19, 2016 with expiration on November 17, 2016, aimed at remedying the shortfalls in the coverage of Minimum Paid-in Capital from February to October 2016.

" Through Letter No. 06-C00-22100/00715 of date January 16, 2017, said Honorable Commission approved the complementary measures to the Regularization Plan presented by this Institution, granting a period for its compliance of 30 natural days counted from January 16, 2017 whose expiration was February 14, 2017.

" In this sense, the shortfalls in the coverage of the Minimum Paid-in Capital that were not remedied in periods approved by said Honorable Commission, were from February 2016 to January 2017 , with amounts of $1,066,086.42, $3,338,403.68, $5,256,031.25, $7,417,877.86, $9,521,416.92, $11,906,797.81, $13,944,586.70, $12,899,095.80, $15,082,593.54, $17,296,946.20, $19,130,882.99 and $20,300,500.30, respectively.

" Notwithstanding the above, we inform our policyholders that from the start of operations of this Institution and to the date of this publication, no non-compliance has occurred with the obligations before our policyholders, as well as, there are no complaints or claims before the National Commission for the Protection and Defense of Financial Services Users (CONDUSEF) and as of the close of March 2017 the shortfalls in the coverage of the Minimum Paid-in Capital will be remedied, to remain within the regulatory parameters required.

" Sincerely

" Lic. Álvaro Julián Villagrán García

" General Director "

" The above, makes evident the express recognition and acceptance by said Institution of the irregularity that motivated the request contained in letter 06-C00-22100/15956 of July 29 of 2016, consisting of submitting to the approval of this Commission a plan of regularization to remedy the shortfall in the coverage of minimum paid-in capital as of March 31, 2016, determined to said Institution in the amount of $3 ' 904,929.96, referred to in the ANTECEDENT VI.

" To further elaborate, in accordance with the information presented to this Commission by said Institution through the Regulatory Report on Financial Statements, RR-7, corresponding to February 28 of 2017, the shortfall in its minimum paid-in capital amounts to the amount of $22,094,950.44, according to the ANTECEDENT XXXI, that is, not only said Institution has not remedied the initial shortfall in said solvency parameter, but that shortfall has increased continuously, so that the current situation of said Institution shows a persistent and considerable financial deterioration.

" SIXTH.- The
article 320, ninth paragraph, of the Law of Insurance and Surety Companies, establishes,
that if after the period of 90 days for compliance with the regularization plan and the period of 30 days for complementary actions to the same, the coverage of all solvency parameters has not been restored, this Commission, in protection of the public interest, will begin the process of revocation of the respective authorization to operate as an Insurance Institution in terms of what is stated in article 334 of said Law.

" Now, as observed in the CONSIDERATIONS SECOND and THIRD, said Insurance Institution not only did not comply within the legal period of 90 days with the regularization plan, required by this Commission in letter 06-C00-22100/15956 of July 29, 2016, indicated in ANTECEDENT VI, nor did it comply within the legal period of 30 days, with the complementary actions required by this Commission in the letter 06-C00-22100/34690 of December 6, 2016, indicated in ANTECEDENT XVII, but even as of February 28, 2016 it has increased the shortfall in the coverage of its minimum paid-in capital

that motivated the aforementioned regularization plan and complementary actions thereto, as noted in the

FIFTH CONSIDERATION in relation to ANTECEDENT XXXI.

" Article 332, fraction II, of the Insurance and Surety Institutions Law, establishes that this Commission, with the agreement of its Board of Directors, and after hearing the Insurance Institution, may declare the revocation of the authorization to operate as an Insurance Institution, in the event that the following situation occurs:

" " II.

If it does not adequately constitute technical reserves in accordance with the provisions of this Law; if it does not maintain the Investment Base covered, in accordance with Articles 231, 250, and 252 of this Law; if it does not have sufficient Admissible Own Funds to cover the solvency capital requirement, in accordance with Articles 241, 250, and 252 of this legislation; or if it does not have the minimum paid-in capital duly covered, in accordance with the provisions of Article 49 of this Law. All of the foregoing, without prejudice to the deadlines referred to in Articles 49 and 320 of this legislation; "

" SEVENTH.- The Regulatory Reports on Financial Statements RR-7, submitted by said Institution corresponding to March 31, 2016, September 30, 2016, October 31, 2016, November 30, 2016, December 31, 2016, January 30, 2017, and February 28, 2017, and indicated in the ANTECEDENTS, V, XIII, XVI, XIX, XXII, XXIV, and XXXI, respectively, and analyzed in the CONSIDERATIONS SECOND, subsections a), h), e) and i), THIRD, fourth and last paragraphs, FOURTH, last paragraph, and FIFTH, last paragraph, provide evidence that said Institution probably committed a violation of the provisions of Articles 49, first, second, and third paragraphs, and 320, first paragraph, fraction III, penultimate paragraph, of the Insurance and Surety Institutions Law, and chapter " 6.1.- On Minimum Paid-in Capital " of the Single Insurance and Surety Circular, published in the Official Journal of the Federation on December 19, 2014, in relation to the Second and Fourth Transitory Provisions of the aforementioned Insurance and Surety Institutions Law, and Annexes 6.1.2 of the aforementioned Circular, published in the aforementioned official dissemination medium on March 30, 2015, and May 31, 2016.

" The aforementioned Regulatory Reports on Financial Statements RR-7 provide evidence against said Insurance Institution that it probably committed the infringing conduct indicated in the first paragraph of this

SEVENTH CONSIDERATION, in accordance with Article 479, second paragraph, of the Insurance and Surety Institutions Law in relation to Articles 133, 203, and 210-A of the Federal Code of Civil Procedures, in that they are private documents originating from said Insurance Institution whose content is contrary to its interests inasmuch as said Insurance Institution expressly acknowledges the existence of the shortfall in the coverage of its minimum paid-in capital, as well as in that said documents were generated by said Insurance Institution, communicated to this Commission, received and archived by it subject to a reliable method that makes it possible to attribute their content to said Insurance Institution, such as the Electronic Information Sending System (SEIVE) in terms of what is provided by Provision 39.1.5 of the Single Insurance and Surety Circular, published in the Official Journal of the Federation on December 19, 2014, and in force from April 4, 2015, as well as Annexes 39.1.5-a and 39.1.5-b of said Circular, published in the Official Journal of the Federation on April 1, 2015, and in force from April 4, 2015.

" The aforementioned valuation and justification of the probative force of electronically generated private documents is applicable to the " Format for sending the Regularization Plans referred to in Article 320 of the Insurance and Surety Institutions Law, Annex 39.5.16-a ", indicated in

ANTECEDENT VII and analyzed in the CONSIDERATION SECOND, subsections d) and f), sent by said Institution on August 18, 2016, electronically, through the Regularization Plans and Self-Correction Programs System (SIPRED), with folio number PRE320-S011-000009-20160818, in which said Insurance Institution submits for the approval of this Commission the plan required to remedy the shortfall in its coverage of minimum paid-in capital as of March 31, 2016, specifying that said shortfall should refer to the minimum paid-in capital requirement of $26,945,968.58, and not to

of $ 27,512,494.86, whereby said electronic document provides evidence against said Insurance Institution that it probably committed the infringing conduct indicated in the first paragraph

of this CONSIDERATION SEVENTH, in accordance with Article 479, second paragraph, of the Insurance and Surety Institutions Law in relation to Articles 133, 203, and 210-A of the Federal Code of Civil Procedures, in that it is a private document originating from said Insurance Institution that is contrary to its interests inasmuch as it acknowledges the existence of the aforementioned shortfall in the coverage of its minimum paid-in capital, as well as because said document was generated by said Insurance Institution, communicated to this Commission, received and archived by it subject to a reliable method that makes it possible to attribute its content to said Insurance Institution, such as the aforementioned Electronic Information Sending System (SEIVE).

" To further elaborate, from what is stated in the paper printout that said Insurance Institution presented to this Commission on August 19, 2017, corresponding to the aforementioned " Format for sending the Regularization Plans referred to in Article 320 of the Insurance and Surety Institutions Law, Annex 39.5.16-a ", indicated in

ANTECEDENT VIII and analyzed in the CONSIDERATION SECOND, subsections d) and f), which contains the regularization plan; from what is stated in its writings of September 12 and October 14, both of 2016, indicated in ANTECEDENTS IX and X, respectively, and analyzed in the CONSIDERATION SECOND, subsections e) and f), in which said Insurance Institution exposes a supposed advance in the regularization plan; from what is stated in its writing of November 25, 2016, received by this Commission on the same day, indicated in ANTECEDENT XV, analyzed in the CONSIDERATION SECOND, subsections j) and k), by which said Insurance Institution indicated it was complying with the regularization plan; from what is stated in its writing of January 5, 2017, received by this Commission on the same day, indicated in ANTECEDENT XVIII and analyzed in the CONSIDERATION THIRD, fifth paragraph, by which it presented complementary actions to the regularization plan; from what is stated in its two writings of March 9, 2017, received, one on that date, and the other on the 10th of the same month, indicated in ANTECEDENTS XXVI and XXVII, and analyzed in the CONSIDERATION FOURTH, in which said Insurance Institution states it has received as payment in kind a property with a value of $70,000,000.00, and that it would receive a cash contribution of

$3,000,000.00, with which, according to its statement, it managed to remedy the shortfall in its coverage of minimum paid-in capital; as well as from its writing of March 17, 2017, indicated in ANTECEDENT XXIX and

analyzed in the CONSIDERATION FOURTH, antepenultimate paragraph, by which it provided the information requested by the General Directorate of Financial Supervision of this Commission, consisting of original and copy of the accounting records made in connection with the issuance of two promissory notes in which the debt owed to its favor of $538,000.00 was recorded and the payment in kind of a property to settle said debt, are private documents, all cited in this paragraph, originating from said Insurance Institution, from which it is observed that it probably committed a violation of Articles 49, first, second, and third paragraphs, and 320, first paragraph, fraction III, penultimate paragraph, of the Insurance and Surety Institutions Law, and chapter " 6.1.- On Minimum Paid-in Capital " of the Single Insurance and Surety Circular, published in the Official Journal of the Federation on December 19, 2014, in relation to the Fourth and Sixth Transitory Provisions of the aforementioned Insurance and Surety Institutions Law, and Annexes 6.1.2 of the aforementioned Circular, published in the aforementioned official dissemination medium on March 30, 2015, and May 31, 2016.

" Based on the foregoing, it can be concluded that the documents referred to in the preceding paragraph provide evidence against said Insurance Institution, in accordance with Article 479, second paragraph, of the Insurance and Surety Institutions Law in relation to Articles 133 and 203 of the Federal Code of Civil Procedures, in that they are private documents originating from said Insurance Institution that are contrary to its interests inasmuch as with them it expressly acknowledges the existence of the shortfall in the coverage of its minimum paid-in capital.

" It is important to observe the express acceptance by said insurance institution of its non-compliance with the regularization plan, in its writing of March 29, 2017, received by this Commission on the same day, and in its writing of March 31, 2017, received on that date, indicated in ANTECEDENTS XXXII and XXXIII and analyzed in the CONSIDERATION FIFTH, by which said Institution indicated, respectively, that it was preparing the corresponding notices regarding said non-compliance, as well as the publication of said notice on its electronic portal on March 29, 2017; and the publication on March 30, 2017, in the newspapers " El Economista "

and " El Financiero ", as well as, on April 5, 2017, in the Official Journal of the Federation, providing photocopies of said publications, all of which provides evidence that said Institution probably committed a violation of the provisions of Articles 49, first, second, and third paragraphs, and 320, first paragraph, fraction III, penultimate paragraph, of the Insurance and Surety Institutions Law, and chapter " 6.1.- On Minimum Paid-in Capital " of the Single Insurance and Surety Circular, published in the Official Journal of the Federation on December 19, 2014, in relation to the Fourth and Sixth Transitory Provisions of the aforementioned Insurance and Surety Institutions Law, and Annexes 6.1.2 of the aforementioned Circular, published in the aforementioned official dissemination medium on March 30, 2015, and May 31, 2016.

" The private documents and photocopies indicated in the preceding paragraph provide evidence against said Insurance Institution, in accordance with Article 479, second paragraph, of the Insurance and Surety Institutions Law in relation to Articles 133, 188, 203, and 217 of the Federal Code

of Civil Procedures,

in that they are private documents and photocopies originating from said Insurance Institution, consistent with each other, and contrary to its interests inasmuch as it acknowledges the existence of the shortfall in the coverage of its minimum paid-in capital.

" Likewise, from the content of the notice 06-C00-22100/15956 of July 29, 2016, received by said

Insurance Institution on August 1, 2016, indicated in ANTECEDENT VI and analyzed in the

CONSIDERATION SECOND, subsections c) and f), by which it was required to submit for the approval of

this Commission a regularization plan to remedy the shortfall in the coverage of minimum paid-in

capital as of March 31, 2016; from the content of notice No. 06-C00-22100/29654 dated October 4

2016, received by said Institution, on the 18th of the same month, indicated in ANTECEDENT XI and the

CONSIDERATION SECOND, subsection g), by which the General Directorate of Financial Supervision

of this Commission, without objecting to the clarification made by said Insurance Institution, when

submitting the regularization plan for approval, to the effect that as of March 31

of 2016 the amount of its minimum paid-in capital

was $26,945,968.58, resolved to authorize the regularization plan; from the content of notice 06-C00-22100/ 33271 of November 16, 2016, received by said Insurance Institution on the 18th of the same month indicated

in ANTECEDENT XIV and analyzed in the CONSIDERATION SECOND, subsections h) and k), in which the

General Directorate of Financial Supervision of this Commission indicated that as of September 2016,

said Insurance Institution continued to present a shortfall in the coverage of minimum paid-in capital by

the amount of $12,899,095.80, as well as, granted it a deadline of five business days, to prove

compliance with the aforementioned regularization plan; from the content of notice 06-C00-22100/34690 of December 6

2016, received by said Insurance Institution on the 9th of the same month, indicated in the

ANTECEDENT XVII and analyzed in the CONSIDERATION THIRD, second paragraph, it appears that the

General Directorate of Financial Supervision of this Commission indicated that as of October 2016, said

Institution presented a shortfall in the coverage of minimum paid-in capital of $15 ' 082,593.54 and granted it a deadline of ten business days, to present complementary actions to the regularization plan;

from the content of notice 06-C00-22100/00715 of January 16, 2017, received by said Institution of

Insurance on the same day, indicated in ANTECEDENT XX and analyzed in the CONSIDERATION

THIRD, sixth paragraph, in which the General Directorate of Financial Supervision of this Commission

indicated that as of November 30, 2016, said Institution continued to present a shortfall of minimum paid

capital by $17 ' 296,946.20, and approved the complementary actions to the regularization plan; of

the content of notice 06-C00-22100/02902 of February 14, 2017, received by said Institution of

Insurance on the same day, indicated in ANTECEDENT XXI and analyzed in the CONSIDERATION

THIRD, seventh paragraph in which the General Directorate of Financial Supervision of this Commission

indicated that as of December 2016, said Institution continued to present a shortfall in the coverage of minimum paid

capital by $19 ' 130,882.99, and indicated a deadline of two business days, for said Institution of

Insurance to send to this Commission the documentation that accredited compliance with the complementary actions;

from the content of notice 06-C00-22100/08206 of March 2, 2017, indicated in the

ANTECEDENT XXV and analyzed in the CONSIDERATION FIFTH, second paragraph, in which the

General Directorate of Financial Supervision of this Commission indicated that since said Institution

continued to present a shortfall in the coverage of minimum paid-in capital by $20,300,500.30, which

is equivalent to 73.8% of said requirement, it ordered it to inform the insured of the non-compliance of the regularization plan that concerns us; from the content of the information request 06-C00-22200/ 08186-2 of March 14, 2017, indicated in ANTECEDENT XXVIII and analyzed in the

CONSIDERATION FOURTH, second paragraph, issued within the inspection visit indicated in the

ANTECEDENT XXIII, in which it was requested from said Insurance Institution, among other information, original and

copy of the accounting records made in connection with the issuance of two promissory notes in which it was made

record the debt owed to its favor of $538,000.00 and in connection with the payment in kind of a property to

settle said debt, and from the content of the notice

06-C00-22100/10356 of March 17, 2017,

received by

said Insurance Institution on the same day, indicated in ANTECEDENT XXX and analyzed in the

CONSIDERATION FIFTH, second paragraph in which it was confirmed to said Insurance Institution the

non-compliance of the regularization plan indicated, and its obligation to inform its

insured about said non-compliance was reiterated, notices, all of which are public documents having been

issued by public officials of this Commission in the exercise of their functions, it is observed that said

Insurance Institution probably committed a violation of the provisions of Articles 49, first,

second, and third paragraphs, and 320, first paragraph, fraction III, penultimate paragraph, of the Insurance and Surety Institutions Law, and chapter " 6.1.- On Minimum Paid-in Capital " of the Single Insurance and Surety Circular, published in the Official Journal of the Federation on December 19, 2014, in relation to the

Fourth and Sixth Transitory Provisions of the aforementioned Insurance and Surety Institutions Law, and

Annexes 6.1.2 of the aforementioned Circular, published in the aforementioned official dissemination medium on March 30,

2015, and May 31, 2016.

" The notices indicated in the preceding paragraph provide full proof of the facts affirmed by the

public officials from whom they originate, in accordance with Article 479, second paragraph, of the Law of

Insurance and Surety Institutions in relation to Articles 129 and 202, first paragraph, of the Code of

Federal Civil Procedures, in that they are public documents issued by

public officials of this Commission in the exercise of their functions.

" Finally, the set of evidence elements previously valued do not contradict each other, but rather

reinforce each other and, as a whole, prove, in the indicated probable degree, the continuous and growing existence of the shortfall in the coverage of minimum paid-in capital of said Institution, with the circumstance that said shortfall amounted to $22,094,950.44 as of February 28, 2017, and also prove, in the

indicated probable degree, the non-compliance with the regularization plan and the non-compliance with the complementary actions thereto.

" In the foregoing circumstances, proven as it has been in the indicated degree, that said Institution of

Insurance, even after the deadlines for complying with the regularization plan and its complementary actions authorized by this Commission have elapsed, does not have the minimum paid-in capital duly covered

since March 31, 2016, in the terms provided in Article 49 of the Insurance and Surety Institutions Law, and chapter 6.1.- On Minimum Paid-in Capital, of the Single Insurance and Surety Circular, published in the Official Journal of the Federation on December 19, 2014, and Annexes 6.2.1 of

said Circular, published in the aforementioned official dissemination medium on March 30, 2015, and May 31,

2016, placing it probably in the causal situation for revocation of its authorization provided for in

Article 332, fraction II, in relation to Article 320, ninth paragraph, of the Insurance and Surety Institutions Law, by not accrediting compliance with said regularization plan nor with its complementary

actions, authorized to remedy the shortfall in the coverage of said solvency parameter. "

XXXV.

The Insurance Institution, through the aforementioned writing of May 25, 2017, responded to

the aforementioned notice of summons 06-C00-42200/18918 of May 4, 2017, expressing to disprove

the probable infringing conduct determined against it, the following arguments:

" " PREVIOUS CONSIDERATION

" In the first place, it is necessary to mention that the notice being answered was issued by said Hon.

Authority when the request made by this Institution to make

a contribution to capital in kind and in cash is pending response, in which it indicated a contribution in cash;

with which we estimate that the problem indicated is definitively solved. For this reason,

we respectfully request that the present summons be left without effect, and proceed to the

analysis of the viability of the solution proposed by NEZTER.

" In effect, through a writing dated April 4, 2017, which was received by said Commission on

April 5 of the same month and year, this Institution presented the proposal for the payment of shares in kind

of the social capital, requesting authorization for the subscription and payment in kind of the shares

that would result according to the update of the corresponding appraisal of a property owned

by the undersigned, in accordance with what is established in the fifth paragraph of Article 49 of the LAW OF

INSURANCE AND SURETY INSTITUTIONS

AND GUARANTEES.

" In the aforementioned document we indicated that the urban property to be contributed as social capital

of NEZTER has an approximate value of $30,000,000.00 (Thirty million pesos 00/100 M.N.)

and is located in the city of Nogales, Sonora. In said writing it was also indicated that

the necessary steps were being taken in order to update the value of the property, through

the corresponding appraisal, in order to determine the number of shares to be subscribed and

paid in kind, which would obviously be determined depending on the updated value of said appraisal.

" In that same writing it was indicated that simultaneously with the contribution in kind, * XXXX

XXXXX would make a cash contribution of up to the amount of $3,000,000.00 (Three million

pesos 00/100 M.N.).

" The foregoing will allow NEZTER to fully comply with the minimum paid-in capital requirement, since with the contribution of the property there would be an approximate surplus in the coverage

of the minimum paid-in capital as of February 29, 2017 of $7,905,049.56 and taking into account

also the contribution of capital in cash, the surplus in the coverage of minimum paid-in capital

would increase to $10,905,049.56 on that same date.

" It is worth noting that as of April 30, 2017 the surplus in the coverage of the minimum paid-in capital

would amount to $13,286,282.16 (Thirteen million two hundred eighty-six thousand two hundred eighty-two

16/100 M.N.), and taking into account also the contribution of capital in cash, the surplus in

the coverage of minimum paid-in capital would increase to $16,286,282.16 (Sixteen million two hundred

eighty-six thousand two hundred eighty-two 16/100 M,N.) on that same date.

" In that vein we also established that the solvency of NEZTER would be adequate by considering

the property as part of its social capital, and that liquidity would be maintained at adequate levels

for the Institution to be in a position to meet all its short-term obligations, since

taking into account the cash contribution of $3,000,000.00, the investments in securities

would be increased by up to that amount and that liquidity would be even more strengthened once

we have initiated the systematic sales process with Sociedad Hipotecaria Federal SNC,

with the consequent result that the coverage parameters of the investment base of

technical reserves and solvency capital requirement, as well as of other liabilities would also

remain with surpluses.

" Finally, in that writing it was manifested that in the event that said request for capitalization in

kind is authorized by said Hon. Commission, in order to remedy the shortfalls in the coverage

of the minimum paid-in capital and maintain solvency and liquidity levels at adequate parameters

it would proceed immediately to hold the respective Shareholders' Meeting that would agree on

the capitalization that was requested, which would be presented to that Authority, as well as the

proof of the indicated cash contribution and, in due course, the documentation that would

accredit the registration of the real estate in the name of this Institution. (A copy of the letter

of April 4, 2017 is attached as Annex 1).

" Although that Authority through Letter No. 06-C00-22100/17184, dated April 25, 2017,

received by this Institution on April 27 of the same year, made observations on the actions

proposed, (a copy of the aforementioned letter is attached to this document as Annex 2), it is also

certain that through a letter dated May 9, 2017 received on that same date, it was given in the

following terms:

" a)

That in order to make the contribution of the real estate it is necessary that the contract

by which I will constitute myself as the sole owner of the real estate be elevated to public deed,

for which the text of the contract was exhibited for approval of that Honorable Commission, as well as the proposal

for a meeting by means of which the contribution of the real estate to the company will be formalized, legal

acts that we proposed be celebrated on the same day; first the titling in my favor and

moments later the contribution to the Institution.

" b)

The undersigned reiterated that the real estate has an approximate value of $30,000,000.00 and that it

is located in Nogales, Sonora, so the corresponding appraisal was attached

prepared by Engineer * XXXXXXXXXXXXXX with a value of $29,940,000.00., qualified appraiser

properly authorized by the Credit Institution called Federal Mortgage Society

(SHF), so it meets the legal requirements, as established by Provision 8.5.1 of the

CUSF, attaching the designation that SHF granted to said Engineer.

" c)

XXXXXXX reiterated the cash contribution of $3,000,000.00, simultaneous with the contribution

kind.

" d)

We established that we considered that the modification to the bylaws is not appropriate,

as suggested by that Commission, since the increase in the Social Capital indicated will be carried out in the

variable part of the Social Capital of NEZTER and it was not detected which Clause of Chapter

Third of the Bylaws of this Institution, should be modified.

" e)

It was established that when the request for capitalization in kind was

authorized by that Honorable Commission, it would proceed immediately to the formalization of the

capitalizations indicated in the petition, proceeding to the celebration of the

Extraordinary Shareholders' Meeting respectively, as well as the proof of the indicated cash contribution

immediately after having been made and, in due course, the documentation

that accredits the registration of the real estate in the name of the Institution (a copy of the present

copy of the letter indicated here with all its attachments as annex 3).

" As can be observed, my represented party has taken the pertinent and necessary measures to resolve

its problem, but that Honorable Commission has not yet given a proper response to the proposed solution, so we

insist that the summons occupied must be left without effect, until such time as the request

raised described in this section is resolved. "

" In the improper case, that that Honorable Authority determines not to leave the summons in effect, we make

for what to the interest of this Institution corresponds the following:

" MANIFESTATIONS

" " 1.- It is of great importance to emphasize, to place that Honorable Authority in the adequate

context of the reality that this company faces day by day.

" NEZTER is an insurance company dedicated to the marketing of the so-called

Property Title Insurance, which is an insurance that in our country still has to this day a

limited penetration, being an insurance of recent formal introduction

to this market.

" Although it had been present in certain foreign investment operations in the

purchase of real estate, there had been no serious effort to create a domestic market that

allowed the systematic issuance of policies.

" It is a fact that the American companies that marketed the product when

considered appropriate to establish subsidiaries in our country the economic conditions of the

United States were very favorable, and therefore they entrusted the success of their operation to the market

that they could attract from their own localities.

" Within that environment, it was that the current shareholders of NEZTER determined to invest and acquire a

insurer with a product of great potential, basing development plans on two basic poles foreign investment and the creation of an internal market.

" That favorable economic condition changed when the mortgage market in the said country entered

a severe crisis, which directly impacted the cancellation of several projects of great

economic impact in the country, and at the same time on the solvency of the parent companies

owners of the subsidiaries.

" In light of the aforementioned crisis, the decrease in foreign investment in real estate was

severely affected.

" Even in such a context, the shareholders of NEZTER determined to continue with this product that without

doubt is of great potential established the need to generate the necessary internal market,

seeking to reach entities that allowed the massive issuance of policies, arriving globally

to the end user of mortgage credits which is of course our natural domestic market.

" For the achievement of its objectives, NEZTER has invested in the hiring of human capital

of great prestige in the insurance and real estate sectors, which is noticeable only by reviewing the

organizational structure of the Institution, which undoubtedly demonstrates the commitment of the

shareholders to the success of the project.

" Notwithstanding the foregoing, we have encountered throughout our journey three situations

of fact that to date have delayed the timely achievement of the established goals which are

as follows:

" a)

The economic environment has not improved, moreover, it has worsened, which makes it difficult

the marketing of new products of the characteristics of ours.

" b) A s they left the market, specialized insurance companies in the United States,

it also became difficult to obtain reinsurance on adequate terms that would allow both that the

costs of the product were more competitive, and that reinsurance coverage were more

comprehensive and adequate.

" c) As we have made known to you, we have managed to get various public institutions

specialized in housing financing, such as INFONAVIT and the Federal Mortgage Society

found the need and usefulness of our product, but due to legal and regulatory issues they had not been able to require the product obligatorily from their clients, so the

marketing has been much slower than expected due to the need to seek changes

of that regulation.

" 2.-

Although, as we have exposed, we have found some problems, it is also necessary

establish that at all times the efforts of the Institution have been aimed at resolving them

in an integral way that allows in a short time to function in a more regular and systematic manner.

Always maintaining the firm intention to comply with all applicable regulations.

" 3.-

As a result of that concern, we have attended each requirement of that Honorable

Authority, making efforts to achieve improve the capitalization of the Institution through the

incorporation of real estate, which have not been sufficiently effective for the purpose of computing

minimum paid-in capital that we would have expected.

" 4.-

In addition to the direct contributions to capital that we referred to in numeral 1,

we have taken other measures that will directly result in the solvency of the company,

such as the change in the reinsurance scheme, which grants us a substantial operational improvement

from the economic point of view, and from the point of view of the coverage obtained that results

in greater certainty of compliance with our future obligations with our insured;

to date we do not have a single reported claim, and by adopting the "claims made" scheme in

the reinsurance we allows us to be in unbeatable conditions for payment of any possible claim.

" 5.-

In the same vein, from the commercial point of view we have also achieved

significant advances that in a short time will translate into the start of a stable and

systematic issuance, since after achieving modifications to the applicable regulation and in front of the realization

of the need for the product, the Federal Mortgage Society will begin to include as a mandatory requirement for the financing it grants the obtaining of a title insurance policy.

It is worth noting that today that Financial Entity considers the obtaining of the insurance

of real estate property title within its "List of technical documents for credit

bridge", (the indicated Relationship is attached as Annex 4), This will mean the creation

eventual of a healthy and durable market for the product. Even, on April 21, 2017, the first two policies have already been

issued within this scheme that have reported premiums for an amount of $855,000.00 (Eight hundred fifty-five thousand pesos 00/100 M.N.).

" At the time of the above, our efforts with INFONAVIT and other authorities are on the

track to be closed soon.

" In addition that we continue with the efforts to market individual policies, whose

sale will be benefited since the investment is slowly increasing driven by the reforms

structural, the entry of fresh capital and the familiarity of the product in foreign financial entities,

that is, we have taken integral measures that are demonstrating their effectiveness, to

obtain capital contributions, we have improved the reinsurance coverage and its costs, as well as

obtained serious commitments from clients of considerable importance that allow

establish beyond doubt the future viability of the Institution, so we are certain that

will allow us in a short time, to reach levels of operation consistent with the established goals.

" These are the reasons, for which we request that the possible infringement be considered

subsaned, to which the summons addressed refers.

" Now well, without prejudice to everything stated above, and with the sole purpose of safeguarding any

procedural defense right that corresponds to NEZTER, we consider it necessary to make the following clarifications regarding some inaccuracies that are contained in the sections of

ANTECEDENTS, CONSIDERATIONS and the RESOLUTION, of the summons, on which, to

following we expose the following:

" ANTECEDENTS NUMERAL VI

" That Honorable Commission did not take into account the letter dated August 12, 2016, signed by the

undersigned, and received on that same date, in which a response was given to the summons letter No. 06- C00-22100/15956 for the probable lack as of March 31, 2016 and requested to submit for approval a plan

of regularization. In this letter, among other points, the following was indicated:

" 1)

Consider that the amount that was deposited in the RR-7 as of March 31, 2016 of the minimum capital

paid by this Institution of $26,945,968.58 is the applicable to that date and not the one indicated by that Honorable

Commission, since the value of the Investment Units that the Authority considered results applicable

subsequent to May 31, 2016, the date on which Circular Modificatory 10/16 of the

CUSF was published and consequently it was not applicable for the figures deposited by this Institution in the RR-7

as of March 31, 2016.

" 2) That the summons indicated in its letter No. 06-C00-22100/15956 had to be carried out with the figures

to February 2016 as evidenced in the information sent in the RR-7, in accordance with what is established

in article 49 of the LISF, in relation to what is provided in Provision 6.1.3 of the CUSF,

since the moment when the accounting capital of this Institution was lower than the minimum paid-in capital

occurred in February 2016 and not in March 2016.

" 3) Take note that this Institution would present in the SIPREP, in compliance with the regulation

corresponding, the Regularization Plan for approval of that Honorable Commission, and on which it was elaborated

in that letter, aimed at remedying the shortfalls in the coverage of the minimum paid-in capital from February to

October 2016, irregularities that were part of said Regularization Plan.

" ANTECEDENTS NUMERAL VII

" That Honorable Commission did not contemplate that in the Regularization Plan with folio PRES320-S011-000009- 20160818, this Institution considered that the irregularity was constituted by the shortfalls in the coverage

of the minimum paid-in capital for the months of February, March, April, May, June and July 2016 and those that

would arise in August, September and October.

" That Honorable Authority omitted to state that in the item "Diverse Clarifications" in the Regularization Plan

presented on August 18, 2016 in the SIPREP with folio number

PRES320-S011-000009- 20160818, this Institution indicated the following:

" a)

That the summons indicated in its letter No. 06-C00-22100/15956 would have to be carried out

with the figures to February 2016 as evidenced in the information sent in the RR-7, in

accordance with what is established in article 49 of the Law of Insurance and Surety Institutions,

in relation to what is provided in Provision 6.1.3 of the Single Circular of Insurance and Bonds, since the

moment when the accounting capital of this Institution was lower than the minimum paid-in capital occurred in

February 2016 and not in March 2016. It was also indicated that it should be considered for the

figures of February 2016 and for the purpose of determining the requirement of the minimum paid-in capital, the value of

the Investment Units as of December 31, 2014.

" ANTECEDENTS AFTER NUMERAL XI

" That Honorable Commission does not state that through letters numbers 06-C00-22100/29648,

06-C00-22100/29649,

06-C00-22100/29650, 06-C00-22100/29651 summoned this Institution for the probable shortfalls in the

coverage of the minimum paid-in capital as of June 30, May 31, April 30 and February 29, 2016,

respectively, all of them received on October 18, 2016 and that these letters were answered

through separate letters received on November 1, 2016, in which among other aspects it

was manifested as follows:

" a)

The cause generating the irregularity to article 49 of the LISF, in relation to what is provided in the

Annex 6.1.2 of the CUSF, as well as Chapter 6.1 of the same Circular, consisted of the shortfall in the

coverage of the minimum paid-in capital in February 2016, therefore we consider that only for that month

the imposition of any sanction by that Authority could be generated.

" b) The summons for the shortfall in coverage and request for presentation of the Plan of

Regularization to March 2016 issued by that Honorable Commission was received by this Institution until August 1, 2016, in such a sense and according to what is established in article 320 of the LISF we were

prevented from presenting a Regularization Plan on our own initiative as soon as it detected that a shortfall was generated in its coverage of the minimum paid-in capital, that is, from the month of February

2016, but it was not until the letter 06-C00-22100/15956 (August 1, 2016) was received and that

for that purpose the months of March, April, May, June and July 2016 had already passed when this

Institution was materially in a position to present the said Regularization Plan for

approval at the express request of the National Commission of Insurance and Bonds. As indicated

in due course, the Regularization Plan would have comprised the correction of the irregularities for the

shortfalls in the coverage of the minimum paid-in capital of February, March, April, May, June, July, as well as the

that would arise in August, September and October 2016. There is no procedure in the

applicable legislation for this Institution to have timely presented for approval the

Regularization Plan to remedy the shortfall in the coverage of the minimum paid-in capital in February 2016

and the subsequent ones that would occur during the validity of the Plan, under the circumstances alluded to.

" c) In all the previous letters, this Institution emphasized that since the Plan of

Regularization presented before that Honorable Authority and approved through the Letter

No. 06-C00-22100/29654,

contemplated the shortfalls in the coverage of the minimum paid-in capital for the months of February, March,

April, May, June and July 2016 and those that would arise in August, September and October

2016 and based on article 320 of the LAW OF INSURANCE AND SURETY INSTITUTIONS

it was estimated that the summons for the months of March, April, May, June and July 2016 were not appropriate,

since the correction of those irregularities were foreseen in the aforementioned Plan of

Regularization and consequently it was requested not to generate any procedure aimed at the imposition of

any sanction for the months of March, April, May, June and July 2016 and those that would arise in

the months of August, September and October 2016.

" ANTECEDENTS AFTER NUMERAL XIX

" That Honorable Commission omitted to state that through letter no. 06-C002-22100/36331 of December 20,

2016 and received on the 21st of the same month and year summoned the Institution for the probable shortfall in the coverage

of the CMP to July 2016, which was answered through a letter dated January 11, 2017, received on the 12th

of the same month and year and whose response was made in the same way as the letters of

summons of the months of February, April, May and June 2016.

" ANTECEDENTS NUMERAL XXVI

" It is clarified to that Honorable Authority that in the letter of March 9, 2017 this Institution did not indicate that

it had received a cash contribution of *

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX X XXXXXX XXXXXXXXX XXXX

for $3,000,000.00 as

incorrectly stated by that Commission in the letter occupying us.

" The object and terms of the aforementioned letter from NEZTER, has been described in abundance in chapters

previous of the present letter.

" Everything mentioned above accredits, the compliance by this Institution of the

requirements of that Honorable Authority and the adequate correction of the problem arisen, so it is

appropriate to declare the same as remedied.

" For all the above, respectfully requesting that Honorable Commission the following:

" FIRST.- Have me presented in the terms of the present letter, indicating domicile, have

authorized the professionals indicated for the effects established, making the appropriate

manifestation of what is convenient to the interest of my represented party, and by reason of what manifested and accredited

declare that in all cases any shortfall in the coverage of the minimum paid-in capital is remedied.

" SECOND.- Leave without effect the summons addressed and do not start the process of

revocation of the authorization to operate as an Insurance Institution, which is established in article 320

of the LISF, in virtue that with the actions detailed in the present and that are pending for

resolution by that Honorable Commission, the problem of the shortfalls in the coverage of the

minimum paid-in capital is solved, being these remedied and the solvency and liquidity of the Institution are preserved.

" THIRD.- Resolve positively the request that is pending for authorization of the contribution

of capital in kind of the real estate indicated above, which will be practiced in the part variable of the

social capital for an amount of $30,000,000.00 (Thirty million pesos 00/100.M.N.), and that in form

simultaneously with the cash contribution of $3,000,000.00 it will provide solvency and reinforce the liquidity

of this Institution.

" FOURTH.- Impose no economic sanction for the shortfalls generated in the coverage of the capital

minimum paid from March 2016 to date, since they are remedied with the actions indicated taking into account that this Institution was subject to a regularization process aimed at remedying them. "

CONSIDERING

FIRST.- This National Commission of Insurance and Bonds, through its Board of Directors is

competent to issue the present resolution based on what is provided in article 90 of the

Political Constitution of the United Mexican States; articles 1, 2, fraction I, 17, 26 and 31, fraction VIII, of the

Organic Law of the Federal Public Administration; articles 2, section D, fraction III, 98 B and 98 C of the

Internal Regulations of the Secretariat of Finance and Public Credit; articles 366, fractions VIII and XIX, 367,

fractions I and II, 369, fractions II and VII, 370 and 372, fraction XLI, and the Transitional Provision Eighth of the Law

of Insurance and Surety Institutions; articles 1, 2, 4, fractions I and II, and 6, paragraphs first and second,

of the Internal Regulations of the National Commission of Insurance and Bonds, published in the Official Journal of the

Federación on June 3, 2015.

SECOND.- Regarding the argumentation raised by the insurance institution under the heading

" PREVIOUS CONSIDERATION " of its response letter of May 25, 2017 through which it gave

response to the summons formulated in letter 06-C00-42200/18918 of May 4, 2017,

the following considerations and analysis proceed:

The Insurance Institution manifested that in its letter dated April 4, 2017, it presented

proposal for the payment of shares in kind of its social capital, requesting the authorization of this

Commission for the subscription and payment in kind of the shares that would result according to the

update of the corresponding appraisal of a real estate property owned by Mr. * XXXXXX XXXX XXXXXXXXXXX

subject to the fifth paragraph of article 49 of the Law of Insurance and Surety Institutions, as well as

that it would contribute in cash $3 ' 000,000.00, shares with which, according to the Insurance Institution, would cover the

requirement of minimum paid-in capital.

The Insurance Institution also manifested that through letter No. 06-C00-22100/17184 of date

April 25, 2017 the General Directorate of Financial Supervision of this Commission, in response to

said letter of April 4, 2017, indicated to it that such contributions constituted a reform to the

bylaws of the Institution, so that according to what is stated in article 66 of the Law of

Insurance and Surety Institutions, those bylaws, as well as any modification to them,

had to be submitted for approval to this Commission.

In relation to the above, it should be noted that in response to the aforementioned letter No. 06-C00-22100/ 17184, the Insurance Institution, through a document dated May 9, 2017, exposed, among other aspects, that the contribution in kind and in cash does not constitute a modification to the corporate bylaws, since such contribution would be made in the variable part of the share capital. Likewise, in said document, the institution submitted the following annexes: Draft of the contract for the alienation of the real estate subject to contribution; Appraisal of said real estate; Authorization by Sociedad Hipotecaria Federal, SNC, as Controller of Real Estate Subject to Guaranteed Housing Credit in favor of * XX XXXXX XXXXXXXXXXXXXXXXXX, responsible for the appraisal of the real estate subject to contribution, and Draft of the Minutes of the Extraordinary General Assembly.

The General Directorate of Financial Supervision of this Commission, through letter No. 06-C00-22100/ 25646 of June 6, 2017, received by the Insurance Institution on the same day, responded to the aforementioned document dated May 9, 2017, pronouncing itself on the proposed capital contribution in kind mentioned in said document, substantially to the effect that, based on the sixth paragraph of Article 49 of the Insurance and Surety Bonds Institutions Law, which states "... Regarding variable capital companies, the mandatory minimum capital will be integrated by shares without withdrawal rights...", in the event that it was the intention of the Insurance Institution to carry out the capital increase in kind in the variable part of said capital, that variable capital increase cannot be considered for the purpose of covering the requirement of paid-in minimum capital, that is, it must be integrated by shares without withdrawal rights in accordance with the indicated legal provision.

Furthermore, in the aforementioned letter No. 06-C00-22100/25646 of June 6, 2017, the General Directorate of Financial Supervision of this Commission, with respect to the information sent by the Insurance Institution, pronounced itself to the effect that the aforementioned real estate did not meet the requirements set forth in fractions XVI and XVII of Article 118 and 134 of the Insurance and Surety Bonds Institutions Law, nor what is stated in Chapter 8.5 of the Unified Insurance and Surety Bonds Circular, in virtue of the following:

In sections I. Background and II. Urban Characteristics, of the appraisal with folio AC-001-05-17, it indicates that the real estate is a rustic pasture land, and not an urban real estate as mentioned in the Institution's document dated April 4, 2017.

The real estate is not leased, nor is it for own use that considers an imputed rent. The foregoing, in virtue of the fact that in the sections mentioned in the previous point, it indicates that the real estate is a rustic pasture land.

Likewise, in section X. Income Approach (Capitalization of Rents), it indicates that this approach does not apply to the real estate in question "

For the above, the aforementioned appraisal proves against the Insurance Institution in virtue of the fact that it is a private document originating from the same, according to Article 479, second paragraph, of the Insurance and Surety Bonds Institutions Law in relation to Articles 133 and 203 of the Federal Code of Civil Procedures.

To further elaborate, the Authorization by Sociedad Hipotecaria Federal, SNC, as Controller of Real Estate Subject to Guaranteed Housing Credit in favor of * XXXX XXXXXXXXXXXXXX XXX XXXXX, responsible for the appraisal of the real estate subject to contribution, and the Draft of the Minutes of the Extraordinary General Assembly, do not provide elements to the effect that said real estate meets the legal requirements established in fractions XVI and XVII of Article 118 and 134 of the Insurance and Surety Bonds Institutions Law.

II.

With regard to the draft contract for the purchase and sale of the real estate whose in-kind contribution the Insurance Institution requested this Commission to authorize and which it exhibited with its document of May 9, 2017, in the aforementioned letter No. 06-C00-22100/25646 of June 6, 2017, the General Directorate of Financial Supervision of this Commission observed the following:

In the section "Background", point "Four.- Encumbrances", it indicates that the real estate reports marginal annotations, without specifying what these are.

Clause second indicates that the parties mutually agree as consideration the amount of $30,000,000.00, paying in cash the amount of $100,000.00, and the difference through a promissory note maturing in May 2023; however, no clauses are specified in the case of non-payment, nor the type of guarantee that will be granted on the debt.

Likewise, in said draft contract for the alienation of the real estate, it mentions that the sellers are the gentlemen * X X XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXX XXXXXX XXXXXXX, same persons who gave in dation of payment the real estate notified through a document dated March 9, 2017, which is located in the same neighborhood, and is part of the same land named "Los Nogales".

The aforementioned draft contract for the purchase and sale of the indicated real estate, furthermore, does not provide elements to the effect that said real estate meets the legal requirements established in fractions XVI and XVII of Article 118 and 134 of the Insurance and Surety Bonds Institutions Law.

For the foregoing, in the aforementioned letter No. 06-C00-22100/25646, with regard to the intended contribution of the aforementioned real estate, the General Directorate of Financial Supervision, based on Article 49 of the Insurance and Surety Bonds Institutions Law, considering the financial situation of the Institution, and safeguarding its liquidity and solvency, resolved that it was not appropriate to authorize the contribution of capital in kind, for the reason that the land that would be the object of contribution as capital is a plot of rustic pasture land, which does not meet the requirements set forth in fractions XVI and XVII of Article 118 and 134 of the invoked Law, nor what is stated in Chapter 8.5 of the Unified Insurance and Surety Bonds Circular.

The consideration and analysis of the arguments of the Insurance Institution, to which the present CONSIDERING SECOND refers, yield the conclusion that the Insurance Institution does not disprove that it contravened what is established in the last paragraph of Article 49 of the Insurance and Surety Bonds Institutions Law, in relation to what is provided in Chapter "6.1.- Of the Minimum Paid-in Capital", of the Unified Insurance and Surety Bonds Circular, published in the Official Journal of the Federation on December 19, 2014, and with the Fourth Transitory Provision of the aforementioned Insurance and Surety Bonds Institutions Law, and Annexes 6.1.2 of the aforementioned Circular, by not having duly covered the minimum paid-in capital, placing itself in the causal scenario for revocation of its authorization provided in Article 332, fraction II, of the Insurance and Surety Bonds Institutions Law.

THIRD.- With respect to the argumentation raised by the insurance institution under the heading "MANIFESTATIONS" of its indicated response document to the aforementioned summons, the following considerations and analysis proceed:

As can be observed from the transcription made of what was exposed by the Insurance Institution under the indicated heading of "MANIFESTATIONS", its content lies, substantially, in exposing that despite having made adequate efforts to achieve the coverage of its minimum paid-in capital, it has faced a variety of situations due to which it has not been possible to cover its minimum paid-in capital requirement, in effect, that Insurance Institution, in summary, under the indicated heading of "MANIFESTATIONS" manifested that it commercializes Title Property Insurance, whose penetration in the market of our country is limited; that its current shareholders decided to invest in the Insurance Institution considering that said insurance had great potential due to the withdrawal of North American companies that commercialized said product and with a view to the creation of an internal market, seeking to reach entities that allowed the massive issuance of policies, thus reaching globally the public user of mortgage credits in the domestic market; that the Insurance Institution has invested in hiring highly prestigious human capital in the insurance and real estate sectors, demonstrating its commitment to the success of the project; that they have encountered three situations that have delayed the achievement of their goals, such as the worsening of the economic environment and difficulties in obtaining reinsurance due to the exit of reinsurance companies from the United States and legal and regulatory issues that have prevented INFONAVIT and Sociedad Hipotecaria Federal from mandatorily requiring the product from their clients; that they have made efforts to achieve the capitalization of the Insurance Institution, with the incorporation of real estate that has not been possible to count as minimum paid-in capital; that they have taken measures to change the reinsurance scheme, that they have no reported claims; that they have achieved significant advances that in a short time will translate into the start of a stable and systematic issuance of the aforementioned insurance, since Sociedad Hipotecaria Federal will include as an obligatory requirement for the financing it grants the obtaining of a Title Insurance policy, with the circumstance that on April 21, 2017, it already issued the first two policies, reporting premiums of $855,000.00.

The aforementioned manifestations of the Insurance Institution confirm that it has not been possible to comply with the legal solvency parameter consisting of the coverage of the minimum paid-in capital requirement, in the terms established by Articles 49, last paragraph, 332, fraction II, and others related of the Insurance and Surety Bonds Institutions Law.

The consideration and analysis of the arguments of the Insurance Institution, to which the present CONSIDERING THIRD refers, yield the conclusion that the Insurance Institution does not disprove that it contravened what is established in the last paragraph of Article 49 of the Insurance and Surety Bonds Institutions Law, and Chapter 6.1.- Of the Minimum Paid-in Capital, of the Unified Insurance and Surety Bonds Circular, published in the Official Journal of the Federation on December 19, 2014, and Annexes 6.2.1 of said Circular, published in the aforementioned official dissemination medium on March 30, 2015, and May 31, 2016, placing itself in the causal scenario for revocation of its authorization provided in Article 332, fraction II, of the Insurance and Surety Bonds Institutions Law.

FOURTH.- Regarding the argumentation raised by the insurance institution starting from the third paragraph of page 8 of its response document to the summons, as it expresses, "only with the aim of safeguarding any procedural defense right that corresponds to it" and as "... clarifications regarding some inaccuracies contained in the sections of BACKGROUND, CONSIDERATIONS and the RESOLUTION of the summons ...", the following considerations and analysis proceed:

The Insurance Institution indicates with respect to the BACKGROUND section of the summons letter, NUMERAL VI: "... That H. Commission did not take into account the document dated August 12, 2016, signed by the undersigned, and received on the same date, in which a response was given to the summons letter No. 06-C00-22100/15956 for the probable shortage as of March 31, 2016 and requested to submit for approval a regularization plan ...".

Regarding this matter, it should be noted that the content of its aforementioned document of August 12, 2016 is substantially similar to the content of the paper printout of the "Format for sending the regularization plans referred to in Article 320 of the Insurance and Surety Bonds Institutions Law, Annex 39.5.16-a", presented to this Commission on August 19 of the same year, since in both that Insurance Institution makes clarifications regarding the value of the UDIS that this Commission should have taken as a base to calculate the amount of the minimum paid-in capital according to which it should have determined the shortages as of March 31, 2016, amount of the minimum paid-in capital that was $26,945,967.58, recorded by that Insurance Institution in the Regulatory Report on Financial Statements, RR-7 corresponding to March 31, 2016, which would have led to determining a real shortage of -$3,338,403.68, but not the amount of $27,512,494.86, considered by this Commission which led it erroneously to determine a shortage of -$3,904,929.96. In any case, it must be kept in mind that when this Commission approved through letter 06-C00-22100/29654 of October 4, 2016, the aforementioned regularization plan that was presented to it on August 19, 2016 in the aforementioned Format, it resolved "... authorize the regularization plan aimed at correcting the shortage in the coverage of the minimum paid-in capital as of March 31, 2016, understanding that, that Institution must take the necessary measures to guarantee that the indicated shares are sufficient to correct said shortage, and those that may arise during its validity and consider the capital contributions that, if any, are necessary to place its statutory parameters within the solvency ranges. Likewise, it is indicated that the ninety-day natural period to correct said irregularity began from August 19, 2016, the date on which that Institution presented the required regularization plan in letter No. 06-C00-22100/15956 ... the foregoing, regardless of the procedure that will be carried out based on Article 477 of the Insurance and Surety Bonds Institutions Law, for the shortages in the minimum paid-in capital corresponding to the months of February, April, May, June and July 2016", which translates into the fact that this Commission took into account the precision and objection formulated by that Insurance Institution both in its aforementioned document of August 12, 2016, and in the "Format for sending the regularization plans referred to in Article 320 of the Insurance and Surety Bonds Institutions Law, Annex 39.5.16-a", presented to this Commission on August 19 of the same year. To further elaborate, in those two documents the Insurance Institution acknowledges having shortages even since February 2016, indicating as one of the objectives of said plan "... correct the shortages in the coverage of the minimum paid-in capital from February to October 2016".

Furthermore, the Institution indicates with respect to the BACKGROUND section of the summons letter, NUMERAL VI: "... That the summons indicated in its letter No. 06-C00-22100/15956 should have been carried out with the figures as of February 2016 as evidenced in the information sent in the RR-7; in accordance with what is established in Article 49 of the LISF, in relation to what is provided in Provision 6.1.3 of the CUSF, since the moment when the book capital of this Institution was lower than the minimum paid-in capital occurred in February 2016 and not in March 2016 ...".

Regarding this matter, it should be indicated that in accordance with what is established in Provision 38.1.8 fraction I of the Unified Insurance and Surety Bonds Circular, the delivery of financial and statutory information sent through the RR-7 is carried out quarterly, so the letter No. 06-C00-22100/15956, through which this Commission summoned the shortage of minimum paid-in capital and requested that it submit for approval of this Commission a regularization plan, was carried out with the financial and statutory information presented by the Institution, corresponding to March 31, 2016, understanding that by correcting the irregularity detected on that date, the shortage that may have occurred prior would be corrected. For the above, subsequently, the summons was carried out for the other months in which it reported shortages in said coverage, such as the case of February 2016, which was summoned through letter No. 06-C00-22100/29651 dated October 4, 2016.

Likewise, with respect to the BACKGROUND section of the summons letter, NUMERAL VI, the Institution indicates that this Commission should "... Take note that this Institution would present in the SIPREP, in compliance with the corresponding regulation, the Regularization Plan for approval of that H. Commission, and on which it elaborated in that document, aimed at correcting the shortages in the coverage of the minimum paid-in capital from February to October 2016, irregularities that were part of said Regularization Plan. ...".

Regarding this particular, this Commission must indicate that indeed the correction of the shortages in the coverage of the minimum paid-in capital is considered from February 2016, in attention to the fact that Article 320, fifth paragraph establishes that: "The regularization plan that is submitted to the consideration of the Commission must establish a period that will not exceed ninety days counted from the next business day following the date in which the period of 15 business days provided for in the second paragraph of this article concludes, for the Institution in question to reestablish the coverage of the solvency parameters referred to in fractions I to III of this article", with the circumstance that as already indicated the Insurance Institution acknowledges having shortages even since February 2016, indicating as one of the objectives of said plan "... correct the shortages in the coverage of the minimum paid-in capital from February to October 2016".

II.

The Institution indicates with respect to the BACKGROUND section of the summons letter, NUMERAL VII, subsection a) that "... That H. Commission did not take into account the document dated August 12, 2016, signed by the undersigned, and received on the same date, in which a response was given to the summons letter No. 06-C00-22100/15956 for the probable shortage as of March 31, 2016 and requested to submit for approval a regularization plan. In this document among other points it was indicated the following:

" 1)

That the summons indicated in its letter No. 06-C00-22100/15956 should have been carried out with the figures as of February 2016 as evidenced in the information sent in the RR-7, in accordance with what is established in Article 49 of the Insurance and Surety Bonds Institutions Law, in relation to what is provided in Provision 6.1.3 of the Unified Insurance and Surety Bonds Circular, since the moment when the book capital of this Institution was lower than the minimum paid-in capital occurred in February 2016 and not in March 2016. Likewise, it was indicated that it should be considered for the figures of February 2016 and for the purpose of determining the requirement of the minimum paid-in capital, the value of the Investment Units as of December 31, 2014 ...".

III.

The Institution indicates with respect to the BACKGROUND section of the summons letter, NUMERAL XI, subsection a) that "That H. Commission does not indicate that through letters numbers 06-C00-22100/29648, 06-C00-22100/29649, 06-C00-22100/29650, 06-C00-22100/29651 it summoned this institution for the probable shortages in the coverage of the minimum paid-in capital as of June 30, May 31, April 30 and February 29, 2016, respectively, all of them received on November 1, 2016 and that these letters were answered through separate documents received on November 1, 2016, in which among other aspects it was manifested the following:

" a) The cause generating the irregularity to Article 49 of the LISF, in relation to what is provided in Annex 6.1.2 of the CUSF, as well as Chapter 6.1 of the same Circular, consisted in the shortage in the coverage of the minimum paid-in capital as of February 2016, therefore we consider that only for that month could the imposition of any sanction by that Authority be generated ...".

Regarding this issue, it should be indicated that indeed that Institution was summoned through the aforementioned letters and even gave response to them, with the circumstance that they were issued by the General Directorate of Financial Supervision for the probable shortages in the coverage of minimum paid-in capital described in the previous table, with the circumstance that the sanctioning procedure initiated through the different summons letter 06-C00-42200/18918 of May 4, 2017, issued by the General Directorate of Contentious Legal and Sanctions, for the probable contravention to what is established in Article 49 of the Insurance and Surety Bonds Institutions Law, and other applicable legal provisions, to the effect of not having that Institution duly covered the minimum paid-in capital, probably placing itself in the causal scenario for revocation of its authorization provided in Article 332, fraction II, in relation to 320, ninth paragraph of the Insurance and Surety Bonds Institutions Law.

From the foregoing it can be observed, that the aforementioned summons letters 06-C00-22100/29648; 06-C00-22100/29649; 06-C00-22100/29650; 06-C00-22100/29651, and 06-C00-22100/36331 were issued by an authority different from the General Directorate of Contentious Legal and Sanctions, and in procedures different from the one initiated through the summons letter 06-C00-42200/18918 of May 4, 2017. In that sense, the substantiation of the sanctioning procedures referred to by that Institution in the point being analyzed, is independent of the procedure instituted with the repeated letter 06-C00-42200/18918.

The Institution indicates with respect to the BACKGROUND section of the summons letter, NUMERAL XI, subsection b) that "... The summons for the shortage in the coverage and request for presentation of the Regularization Plan as of March 2016 issued by that H. Commission was received by this Institution until November 1".

August 2016, in this regard and in accordance with what is established in Article 320 of the LISF, we were prevented from presenting a Regularization Plan on our own initiative once it was detected that a shortfall had been generated in the coverage of the minimum paid-in capital, that is, from the month of February 2016, but it was not until the receipt of the notice 06-CO0-22100/15956 (August 1, 2016) and by which time the months of March, April, May, June, and July of 2016 had already passed that this Institution was materially in a position to present the aforementioned Regularization Plan for approval upon express request by the National Insurance and Bonds Commission. As previously noted, the Regularization Plan would have comprised the correction of irregularities regarding the shortfalls in the coverage of the minimum paid-in capital for February, March, April, May, June, July, as well as those that might arise in August, September, and October 2016. There is no procedure in the applicable legislation for this Institution to have timely presented for approval the Regularization Plan to remedy the shortfall in the coverage of the minimum paid-in capital as of February 2016 and the subsequent ones that occurred during the validity of the Plan, under the circumstances mentioned..."

In this sense, it is important to note that regardless of the dates on which the General Directorate of Financial Supervision cited the shortfalls and requested the regularization plan, in terms of Article 49, last paragraph, of the Law of Insurance and Bonds Institutions, the Insurance Institution is obligated to ensure that at no time its paid-in capital is lower than the minimum determined by this Commission, and in case of non-compliance, it is obligated to replenish it, and obviously, if this Commission requires the presentation of a regularization plan under Article 320 of said Law, the Insurance Institution is obligated to present that plan, but the two obligations cited first are not subordinate to or dependent on this Commission requiring the Institution to submit a regularization plan for the shortfalls it presents in its minimum paid-in capital. It is the case that, as the institution itself has recognized, it observed that it had shortfalls in the indicated solvency parameter since February 2016, so it should have immediately proceeded to remedy said shortfall as well as the successive ones, and not waited for the regularization plan request issued by this Commission.

The Institution indicates regarding the section ANTECEDENTS of the citation notice, NUMERAL XI, subsection c) that "...In all previous writings, this institution emphasized that since the Regularization Plan presented before this Honorable Authority and approved via Notice No. 06-C00-22100/29654, contemplated the shortfalls in the coverage of the minimum paid-in capital for the months of February, March, April, May, June, and July 2016 and those that might arise in August, September, and October 2016, and based on Article 320 of the LISF, it was estimated that the citations for the months of March, April, May, June, and July 2016 were not applicable, since the correction of these irregularities were foreseen in the aforementioned Regularization Plan and consequently, it requested that no procedure be generated aimed at imposing any sanction for the months of March, April, May, June, and July 2016 and those that might arise in the months of August, September, and October 2016...".

As already indicated, regardless of the dates on which the General Directorate of Financial Supervision cited the shortfalls and requested the regularization plan, in terms of Article 49, last paragraph, of the Law of Insurance and Bonds Institutions, the Insurance Institution is obligated to ensure that at no time its paid-in capital is lower than the minimum determined by this Commission, and in case of non-compliance, it is obligated to replenish it, and obviously, if this Commission requires the presentation of a regularization plan under Article 320 of said Law, the Insurance Institution is obligated to present that plan, but the two obligations cited first are not subordinate to or dependent on this Commission requiring the Institution to submit a regularization plan for the shortfalls it presents in its minimum paid-in capital. It is the case that, as the institution itself has recognized, it observed that it had shortfalls in the indicated solvency parameter since February 2016, so it should have immediately proceeded to remedy said shortfall as well as the successive ones, and not waited for the regularization plan request issued by this Commission.

IV.

The Institution indicates regarding the section ANTECEDENTS of the citation notice, NUMERAL XXVI that "...It is clarified to this Honorable Authority that in the writing of March 9, 2017, this Institution did not state that it had received a cash contribution of * XXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX for $3'000,000.00 as incorrectly stated by this Commission in the notice under consideration...".

Regarding this statement, the General Directorate of Financial Supervision notes that in the writing dated March 9, 2017, the Institution stated that the cash contribution in the amount of $3'000,000.00 by * XXXXXXXXXXXXXXXXXXXXX would be made no later than March 20, 2016; however, in the writings dated April 4 and May 9, both of this year, it is mentioned that said contribution will be made simultaneously with the contribution of the real estate with an approximate value of $30'000,000.00, in the event that the latter is approved.

The consideration and analysis of the arguments of the Insurance Institution, to which the present CONSIDERING FOURTH refers, yield the conclusion that the Insurance Institution does not disprove that it contravened what is established in Article 49, last paragraph, of the Law of Insurance and Bonds Institutions, in relation to what is provided in Chapter "6.1.- Of the Minimum Paid-in Capital", of the Single Insurance and Bonds Circular, published in the Official Gazette of the Federation on December 19, 2014, and with the Fourth Transitory Provision of the aforementioned Law of Insurance and Bonds Institutions, and Annexes 6.1.2 of the aforementioned circular, by not having the minimum paid-in capital duly covered, placing itself in the causal scenario for revocation of its authorization provided for in Article 332, fraction II, of the Law of Insurance and Bonds Institutions.

FIFTH.- Based on what is exposed in the preceding CONSIDERING SECOND to FOURTH, it has been proven that the Insurance Institution, even after the deadlines for complying with the regularization plan and its complementary actions authorized by this Commission have passed, does not have the minimum paid-in capital duly covered since March 31, 2016, in the terms provided in Article 49, last paragraph, and the Eighth Transitory Provision of the Law of Insurance and Bonds Institutions, and Chapter 6.1.- Of the Minimum Paid-in Capital, of the Single Insurance and Bonds Circular, published in the Official Gazette of the Federation on December 19, 2014, and Annexes 6.2.1 of said Circular, published in the aforementioned official dissemination medium on March 30, 2015, and May 31, 2016, placing itself in the causal scenario for revocation of its authorization provided for in Article 332, fraction II, of the Law of Insurance and Bonds Institutions.

RESOLUTIONS

FIRST.- The Board of Directors of this Commission, in its session number 195 dated July 20, 2017, agreed to declare the revocation of the authorization granted by the Federal Government through the Secretariat of Finance and Public Credit to operate as an insurance institution to NEZTER SEGUROS, S.A. DE C.V., formerly FIRST AMERICAN TITLE INSURANCE DE MÉXICO, S.A. DE C.V., via notice 101.-428 of August 2, 2011, published in the Official Gazette of the Federation on October 14, 2011, to carry out the operation of damage insurance, in the diverse branch.

SECOND.- Based on Articles 334, second paragraph, and 459 of the Law of Insurance and Bonds Institutions, the present resolution is notified.

THIRD.- Based on Article 334, second and third paragraphs, of the Law of Insurance and Bonds Institutions, the declaration of revocation incapacitates the insurance institution from issuing any insurance from the date the revocation is notified; and, places the society in a state of administrative dissolution and liquidation.

FOURTH.- Based on Article 334, second paragraph, of the Law of Insurance and Bonds Institutions, the present resolution is published in the Official Gazette of the Federation and in two newspapers of wide circulation in the country.

FIFTH.- Based on Article 334, second paragraph, of the Law of Insurance and Bonds Institutions, the present resolution is inscribed in the Public Property and Commerce Registry.

Respectfully. EFFECTIVE VOTING. NO RE-ELECTION. NATIONAL INSURANCE AND BONDS COMMISSION.- THE PRESIDENT, NORMA ALICIA ROSAS RODRÍGUEZ.- Rubric.

Óscar Ernesto Vela Treviño.- Head of the Insurance, Pensions and Social Security Unit.- Undersecretariat of Finance and Public Credit.- Av. Insurgentes Sur Number 1971, Plaza Inn Complex, Towers III, Floor 6, Col. Guadalupe Inn, Álvaro Obregón Delegation, C.P. 01020, Mexico City.

Lic. Mario Alberto Di Constanzo Armenta.- President of the National Commission for the Protection and Defense of Users of Financial Services.- Av. Insurgentes Sur Number 762, Col. Del Valle, Benito Juárez Delegation, C.P. 03100, Mexico City.

Mtro. Eduardo Rovelo Pico, General Director of the Public Property and Commerce Registry.- Manuel Villalongín Boulevard Number 15, Col Cuauhtémoc, C.P. 06500, Cuauhtémoc Delegation, Mexico City.

Lic. Gerardo Lozano de León, Vice President of Institutional Operation.
Lic. Luis Eduardo Iturriaga Velasco, Vice President Legal.
Mtro. José Gerardo López Hoyo, Vice President of Analysis and Sectoral Studies.
Ing. Guillermo E.J. Orozco Gómez, Vice President of Information Technology and Planning.
ELGG

*Deleted: Reference to personal data in a line. Legal Basis: Article 113, fraction I and last paragraph, of the Federal Law of Transparency and Access to Public Information; Motivation. It is personal data classified as confidential.

This constitutes the public version of notice 06-C00-42200/40417 of July 20, 2017, and faithfully and exactly matches the same, testing the information considered confidential, and is issued based on Articles 334, second paragraph, 366, first and second paragraphs, fractions VIII and XIX, 367, fraction II and 373 of the Law of Insurance and Bonds Institutions; Articles 1, 2, 4, first paragraph, fraction II and 9 of the Internal Regulations of the National Insurance and Bonds Commission; 98, fraction III, 108 and 118 of the Federal Law of Transparency and Access to Public Information; 100, 106, fraction II and 116 of the General Law of Transparency and Access to Public Information; and Fourth, Ninth, Thirty-Eighth, Forty-Ninth and Sixtieth of the General Guidelines on matters of classification and declassification of information, as well as for the elaboration of public versions, published in the Official Gazette of the Federation on April 15, 2016.

Respectfully.

Effective Voting. No Re-election.

Mexico City, July 20, 2017.- The President of the National Insurance and Bonds Commission, Norma Alicia Rosas Rodríguez.- Rubric.

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