GRUPO NACIONAL PROVINCIAL, S. A. B.

COMPANY PROGRESS REPORT PRESENTED BY THE CHIEF EXECUTIVE OFFICER TO THE BOARD OF DIRECTORS, FOR FISCAL YEAR 2017 

To the Chairman of the Board, 

Board members: 

As Chief Executive Officer of Grupo Nacional Provincial, S.A.B. (GNP), and in accordance with the provisions of the Securities Market Law (Ley del Mercado de Valores), I submit for your consideration the Annual Report on the performance and results obtained by the Company during the 2017 fiscal year, the Financial Statements and their explanatory notes, and the main accounting and reporting policies and criteria followed in the preparation of the financial data presented herein. 

In 2017, Mexico achieved an economic growth of 2.3%, although the national and international macroeconomic environment showed a high degree of uncertainty in financial markets, which led to a rise in inflation, a highly fluctuating exchange rate throughout the year and a gradual increase in interest rates. 

The insurance industry reported a yearly nominal growth rate of 10.7% considering Pemex, and of 7.9% not considering Pemex. The year saw an unusual increase in car thefts and major catastrophic events, such as the terrible earthquakes in September. 

In light of these events, GNP once more showed its spirit of service and high sense of social responsibility by immediately attending to its insured. Moreover, the Company participated in various humanitarian activities, including a contribution to education through the Alberto Baillères Foundation, the social program Gol por México for housing reconstruction, and the donation caravans to affected areas in the interior of the country. 

In this adverse scenario, and for the second consecutive year, GNP continued to grow and strengthen its financial soundness, reaching premiums of $55.89 billion pesos and a solvency margin of $4.402 billion pesos, above the legal minimum. 

With these figures, we held our position during the year as the second largest insurance company in market share and third largest in profits. 

Our progress in this fiscal year is reflected in the high scores obtained from our rating agencies: AM BEST awarded us a national rating of “Excellent” (“aa+MX”), and Standard & Poor´s gave us the highest national rating, “Satisfactory” (“mxAAA). 

Immersed in the intense competition shown by the industry, the continued good results in Medical Expenses, good earnings performance in Damages (despite the major catastrophes), sustained growth of Individual Life and the application of an important correction program in Auto (which was affected by the increase in auto theft) made a notable contribution to improving operating performance. 

This year, we revised the Strategic Plan and renewed our Vision 2022, in which we reiterated our commitment to become the second most profitable traditional insurer, the leading insurer in premiums, the insurer with the best people, and leading insurer in innovation. 

The Company’s main indicators are shown below: 

Esteemed Board Members, 

I wish to express my gratitude to the entire team that makes up the GNP family, through whose dedicated collaboration we have made significant progress in the Company’s growth and development within the insurance industry. 

I am also grateful for the confidence placed in me by the Chairman and the members of the Board of Directors and the Executive Committee. 

Mario A. Vela Berrondo 

CHIEF EXECUTIVE OFFICER 

GRUPO NACIONAL PROVINCIAL, S.A.B.