GNP SEGUROS

GNP SEGUROS
Grupo Nacional Provincial S.A.B.
Corporate Offices
2010 ANNUAL REPORT
Av. Cerro de las Torres No. 395,
Campestre Churubusco, 04200, D.F.
Tel. 5227 3999
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CONTENT
ANNUAL REPORT
1
FINANCIAL HIGHLIGHTS
2
ANNUAL REPORT OF THE BOARD OF DIRECTORS TO THE SHAREHOLDERS
3
REPORT OF THE CHIEF EXECUTIVE OFFICER TO THE BOARD OF DIRECTORS
6
PRINCIPAL RESULTS
9
PRODUCTS AND SERVICES
10
SALES FORCE 15
CUSTOMER SERVICE
16
LOSSES
19
TECHNICAL RESULTS
20
INCREASE IN OTHER RESERVES
21
OPERATING EFFICIENCY
22
INVESTMENTS
25
RESULTS AND SOLVENCY
26
OUR PEOPLE
28
SOCIAL PROGRAMS
31
SOCIAL RESPONSIBILITY
32
“LIVING IS INCREDIBLE” ADVERTISING CAMPAIGN
35
CORPORATE AFFILIATES
36
BOARD OF DIRECTORS
42
ORGANIZATION CHART
43
INFORME ANUAL 2010
Grupo Nacional Provincial is part of the Grupo Bal, one of the most important and diversified
conglomerates in the country that consists of highly prestigious institutions:
Insurance Sector:
Grupo Nacional Provincial, S.A.B.
Médica Integral GNP, S.A. de C.V.
Médica Móvil, S.A. de C.V.
DESIGN & PHOTOGRAPHY: 33 VISUAL • ILLUSTRATIONS: FABIÁN GONZÁLEZ
MISSION, VISION AND VALUES
Pension Sector:
Grupo Profuturo, S.A.B. de C.V.
Estrategias Porvenir, S.A. de C.V.
Pensiones Profuturo GNP, S.A. de C.V.
Profuturo GNP, S.A. de C.V. Afore
Profuturo GNP Pensiones, S.A. de C.V.
Profuturo GNP Fondos, S.A. de C.V.
Sociedad Distribuidora de Acciones de Sociedades de Inversión
Profuturo GNP Préstamos, S.A. de C.V.
Financial Sector:
Crédito Afianzador, S.A., Compañía Mexicana de Garantías
Valmex Soluciones Financieras, S.A. de C.V., SOFOM, E.N.R.
Valores Mexicanos Casa de Bolsa, S.A. de C.V.
Commercial Sector:
Grupo Palacio de Hierro, S.A.B. de C.V.
Industrial Sector:
Industrias Peñoles, S.A.B. de C.V.
Fresnillo plc
Educational Sector:
Grupo Bal makes an important contribution to the education and development of trained
professionals through their philanthropic work, sponsoring
the Autonomous Technical Institute of Mexico (ITAM).
1
Mission
Our mission is to satisfy the needs for financial protection and security
and health services of Mexican society.
Vision
The vision of GNP establishes four goals that will be our focus for
the next 5 years. This vision is called 1 in 4 in 5, which means to be
number 1 in 4 goals in the next 5 years.
Number 1 in profitability
Number 1 in customer service
Number 1 in operating efficiency
Number 1 in attracting and retaining the most talented people
These four elements of our vision are integrated.
We work on each one of them at the same time with sacrificing
one to attain others.
Values
Business Oriented
Results
Responsibility
Innovation
People Oriented
Integrity
Collaboration
Passion
Loyalty
Service Oriented
“We treat our customers like we would like to be treated
as customers.”
GNP SEGUROS
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GRUPO NACIONAL PROVINCIAL, S.A.B.
Financial Highlights
(Figures in millions of pesos in purchasing power at December 31, 2010)
CONCEPT
20102009 Change
$$ %
TOTAL ASSETS
56,259 54,455
(1.0)
TECHNICAL RESERVES
43,942 42,654
(1.3)
NET WORTH( (1)
6,148
6,021
(2.2)
SOLVENCY MARGIN
1,922
1,676
9.8
PREMIUMS AND FUNDS UNDER MANAGEMENT 28,285
27,404
(1.1)
PREMIUMS WRITTEN
27,734
26,863
(1.1)
TECHNICAL PROFIT(2)
553
406
30.7
OPERATING EXPENSES
2,395
2,362
(2.9)
FINANCIAL INCOME
2,776
2,913
(8.7)
INSURANCE PROFIT
686
1,012
(35.1)
NET PROFIT
687
1,010
(34.9)
(1) Net Worth is composed of the Accounting Capital and Equity Reserves plus the Embedded Value of the
life insurance portfolio and totaled 10,585 and 10,408 million pesos in 2010 and 2009, respectively.
(Note: a rate of 10% was used in calculating the Embedded Value).
(2) Excluding Financial Expense in Life Insurance: the Technical Result was 864 and 695 million pesos in
2010 and 2009, respectively.
2010 ANNUAL REPORT
3
GRUPO NACIONAL PROVINCIAL, S. A. B.
Annual Report of the Board
of Directors to the Shareholders’ Meeting
for fiscal year 2010
Dear Shareholders:
In my capacity as Chairman of the Board of Directors
of Grupo Nacional Provincial, S.A.B. and on its behalf, I
am pleased to present you with our report based on an
analysis of the information furnished by the Chief Executive Officer in his annual report on the performance of the
company, the principal results achieved, the highlights of
fiscal year 2010 and a report on the principal activities of
the Board of Directors.
Alberto Baillères
Chairman of the Board of Directors
In this year of commemorations of the Bicentennial of Independence and the Centennial of the Revolution, we are
proposing to celebrate these events with a special, singular
contribution to our nation. GNP has established a program
called “Our Mexico in the Future” that invites all Mexicans
to imagine Mexico as they would like to see it through positive comments and constructive ideas to be converted into
tangible proposals for the construction of Mexico that all
of us seek.
Grupo Nacional Provincial, S. A. B.
In likewise fashion and as a test of the high standards of
commitment to sustainable development, GNP was awarded the distinction of Socially Responsible Company for the
seventh time as well as recognition for Gender Equity. It is
particularly noteworthy that our company has adhered to
the Global Compact of the United Nations and received a
grade of B+ in the global methodology of the GRI (Global
Reporting Initiative) for its first report of Corporate Social
Responsibility published in 2010.
Another achievement worthy of mention is that GNP was
recognized for the third consecutive year with the highest
rating (9.8) in the area of transparency and quality of information furnished to customers granted by the National
Commission for the Protection and Defense of Financial
Services Users (Spanish acronym: Condusef) in its rating
of financial products. In this instance, it was recognized for
Individual Home Insurance. The rating received stands out
in comparison with the average rating of 7.9 for the sector.
Nevertheless, the insurance sector in 2010 suffered from
the effects of various adverse natural phenomena and an
increase in vehicle thefts. In order to handle this latter development, GNP has made adjustments to its subscription
and pricing policies.
GNP SEGUROS
4
In addition, the competitive dynamics of the
insurance sector have become increasingly
intense. In consequence, we have had to
review our strategic priorities and redouble
our effects to strengthen our capabilities
that are necessary to achieve our long-term
vision: to be the number one company in
profitability, efficiency, customer service
and talent retention.
On the other hand and as an example of the
work done during the years, I am pleased
to inform you that in 2010 GNP won the
tender of the Federal Public Life Insurance
Administration. This is a great achievement because it is the largest insurance
policy in Mexico with around 1 million insured customers.
The company maintained its dynamism during the year in generating new products.
Among these, the case of Individual Life
stands out with plans adjusted to the economic environment, not only to support the
preservation of customers – first offered in
2009 – but also to offer the potential to reduce the amount of coverage under policies
with flexible plans (Platinum Universal, Privilege Universal, Vision Plus and Consolidated
plans) in order to continue offering our customers protection even when their financial
situation has been affected by the crisis.
In a similar manner and to satisfy the distinct needs of our customers, some new
products were offered among which “Life
for your dreams” stood out, a product that
enables insureds to guarantee savings in
the short term for a specific objective. Also
noteworthy were improvements to the
“Versatile Blue Line” product for medical
expenses that included more competitive
rates, among other actions.
15.4% in sales in the Automobile and Casualty lines, respectively, from the levels of
sales in 2009. The foregoing was chiefly the
result of the fact that we sought to avoid assuming risks that did not satisfy our profitability criteria.
Grupo Nacional Provincial remained in
second place in terms of sales with a 12%
share of the insurance market in Mexico.
On the other hand, again in 2010 we had
to absorb the cost of a number of adverse
natural events such as the earthquake in
Baja California that caused severe damage
in Mexicali, and Hurricane Alex that impacted the cities of Reynosa, Tampico, Nuevo
Laredo and Monterrey. These phenomena
provided GNP with a great opportunity to
demonstrate its leadership in customer service by putting in motion a service strategy
for insureds customers that made the difference for them in difficult times.
Notwithstanding the impact of the factors
noted above, the loss ratio came to 72.7%,
that is to say, 1.7% percentage points less
than the figure of 74.7% recorded in 2009.
Consolidated technical results were 553
mdp which, compared with the result of
406 mdp obtained in 2009, represented an
increase of 30.7%. Consolidated technical
results as a percentage of premiums written reflected an improvement of 0.5 percentage points.
As a result of our efforts to control expenses and continuing improvement in our
processes, there was progress in the area
of operating costs that was reflected in a
lower ratio of net operating costs to premiums written of 0.5 percentage points in
comparison with the prior year.
With respect to financial results, sales of
Grupo Nacional Provincial in 2010 totaled
27,734 million pesos (mdp), a figure that
represented a decrease of 1.1% in real
terms compared to the year before.
Financial income declined by 8.7% to 2,776
mdp compared to the previous year as a
consequence of the significant drop in interest rates during 2010.
The decrease in sales can be explained
principally by the declines of 1.2% and
Consolidated profits generated by the insurance business in 2010 totaled 686 mdp,
2010 ANNUAL REPORT
5
an amount in line with our budget but less
than in 2009. This performance can be explained by the reduction in sales and interest earned that, added together, had a bearing on the better technical results, lower
cost ratio and release of reserves. On the
other hand, the solvency margin increased
by 9.8% over the prior year to 1,922 mdp at
the close of fiscal year 2010.
In addition, the Board of Directors reviewed
and ratified the resolutions of the Executive Committee and approved the Financial
Statements of the company presented for
the different periods in fiscal year 2010. It
should be mentioned that the Board had the
support of the committees recommended
in the Code of Best Corporate Practices that
met on a regular basis.
As a consequence, the accounting net
worth of the company was 6,148 mdp at the
close of 2010. If the intrinsic value of the Individual Life portfolio is added in, calculated
under the Embedded Value1 methodology,
the economic net worth of the company increases to 10,585 mdp. These figures indicate the financial strength of the company.
In the opinion of the Board of Directors, the
report of the Chief Executive Officer presented to this Shareholders’ Meeting reasonably reflects the financial position and
results of the company as well as the more
important aspects of the company’s performance during 2010.
Dear Shareholders:
These efforts have resulted in ratification
of the ratings issued by the various rating agencies. Standard & Poor’s rated us
“mxAA+” (Excellent) on a domestic scale
and “BBB” (Very good) on an international
scale with a stable outlook. For its part, AM
Best, a firm that specializes in the insurance
industry, ratified its rating of “A” (Excellent).
The Financial Statements that give rise
to the previous comments, as well as the
principal accounting policies and criteria
applied in the preparation of the financial
information, were audited by our independent auditors and are included in the report
of the Chief Executive Officer.
As stated in the opinion of the Committee
on Auditing and Corporate Practices – that
takes into consideration the opinion of the
independent auditors and the relevant information provided by management of the
institution – the policies and criteria used
for accounting and informational purposes
are adequate and sufficient and have been
applied in a consistent manner.
We reaffirm our commitment and responsibility to the people related to GNP: to preserve and increase our net worth for our
shareholders, to protect our insured customers loyally and efficiently from the economic consequences of the losses that they
suffer, and to offer our employees a rewarding work environment and opportunities for
professional development.
As I do each year, I want to thank the Board
of Directors, the Executive Committee and
the various committees of the Board for
their valuable support and their wise counsel, and our shareholders for the confidence
they have shown in us.
Alberto Baillères
Chairman of the Board of Directors
Grupo Nacional Provincial, S. A. B.
The Board of Directors participated actively in the establishment of the strategies
for the conduct of our business that are
aligned to Vision 2012 and also monitored
the various actions taken by the company
and its affiliates.
1
The calculation of Embedded Value and a sensitivity analysis are presented in a footnote to the Financial Statements.
GNP SEGUROS
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GRUPO NACIONAL PROVINCIAL, S.A.B.
Report of the Chief Executive Officer to the
Board of Directors on the performance of the
company in fiscal year 2010
Chairman of the Board of Directors
and Directors:
In my capacity as Chief Executive Officer and in accordance
with the provisions of the Securities Law, I am pleased to
submit for your consideration the Annual Report of the
performance and results obtained by the company for fiscal year 2010 as well as the Financial Statements and the
accompanying footnotes that include the principal policies
and the accounting and informational criteria applied in the
preparation of the financial information presented.
Alejandro Baillères
The international economy displayed a somewhat more
favorable setting for business development during 2010
but not enough to permit a recovery in employment to take
place. The Mexican economy exhibited favorable signs of
performance. Nonetheless, the problems of insecurity and
organized crime created a difficult environment for the insurance sector.
Chief Executive Officer
Grupo Nacional Provincial, S. A. B.
In this context, it was of fundamental importance to strength
our competitive position by taking specific actions to develop new businesses, products and indispensable services
to maintain the profitable growth of our portfolios. These
actions were aimed at achieving our basic mission of aiding
society in taking precautionary measures to mitigate risks.
In fiscal year 2010, GNP won the tender of the Federal Public Life Insurance Administration. This represents a great
achievement for our institution because it is the largest insurance policy in the country.
For the third consecutive time, the National Commission
for the Protection and Defense of Financial Services Users
(Spanish acronym: Condusef) also awarded us the highest
rating for transparency and quality of information provided
to our customers. Ultimately, this translates into better service for our clients and insured customers.
In this award, the Individual Home Insurance area received
a rating of 9.8, one grade higher than the average of 7.9
given to the sector. The foregoing was united with the recognition received in Individual Medical Expenses that received a rating of 9.9 and Individual Educational Insurance
that was rated 9.8.
2010 ANNUAL REPORT
7
The results obtained require that we try even harder to continue on the path to achieving our Vision 2012 that guides
our strategic efforts to position the company as the leader
in the insurance market in the areas of profitability, operating efficiency, customer service and retaining talent.
Our efforts have likewise been buttressed by ratings issued
by the various rating agencies: Standard & Poor’s rated us
“mxAA+” (Excellent) on a domestic scale and “BBB” (Very
good) on an international scale with a stable outlook. For
its part, AM Best, a firm that specializes in the insurance
industry, ratified its rating of “A” (Excellent) which means
that we remain at a level that is competitive with insurance
companies in the world that have similar characteristics.
A series of events - that were unquestionably very transcendent and reminded us of a passionate historical journey – were the celebrations of the Bicentennial of Independence and the Centennial of the Revolution. With the
firm conviction that we are a magnificent country, GNP
initiated a movement that invites all Mexicans to imagine
Mexico as they would like to see it through positive comments and constructive ideas in a program called “Our
Mexico in the Future.”
At the close of 2010, 30,000 Mexicans from 18 cities in the
Mexican Republic had sent their “vision of Mexico” both in
videos and on mobile displays, and through the principal
social networks on the Internet.
The invitation to participate in this movement will last until
June 2011 and the messages will be compiled in a book
to be delivered next December to the government and the
2012 presidential candidates. This testifies to the social responsibility and commitment of GNP to Mexico.
GNP SEGUROS
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2010 ANNUAL REPORT
9
Principal Results
The Life and Major Medical Expense lines showed increases in sales
of 1.8% and 0.7%, respectively in 2010.
In accordance with the provisions of Circular S-18.4 issued by the National Insurance and
Finance Commission published in the Official Journal of the Federation on April 6, 2010,
the Consolidated Financial Statements are presented, prepared in accordance with Financial Reporting Standards (Spanish acronym: NIF) B-8, “Consolidated or combined financial
statements” and C-7, “Investments in associates and other permanent investments” issued
by the Mexican Council for Research and Development of Financial Reporting Standards,
A.C. (Spanish acronym: CINIF).
The results show that Grupo Nacional Provincial had consolidated revenues of 27,734 million pesos (mdp) in fiscal year 2010 from premiums written that represented a decline of
1.1% with respect to the year before1. On the other hand, funds under management totaled
550 mdp.
The Life Insurance area generated sales of 10,133 mdp that represented a significant increase over the level of 9,538 mdp obtained in 2009. In Medical Expense, an increase of
0.7% in sales was achieved over the prior year.
The Automobile line showed production of 6,229 mdp in 2010 for a decrease of 1.2%
compared to the previous year. This area was impacted by the behavior of new car sales.
The Casualty line produced sales of 2,356 mdp in 2010 that were 15.4% below the figure
in the prior year as a consequence of a loss of business that did not meet profitability requirements. We continue to concentrate our efforts in this area on reaching segments with
high profitability.
GNP: SALES BY LINE
Nominal REAL
LINE
2010
mdp
mdp
%
%
10,133
9,538
6.2
1.8
Medical Expense and Accidents
8,838
8,403
5.2
0.7
Automobile
6,229
6,039
3.1
(1.2)
Casualty
2,356
2,666
(11.6)
(15.4)
27,734
26,863
3.2
(1.1)
550
541
1.8
(2.5)
28,285
27,404
3.2
(1.1)
Life
Total premiums (Consolidated Figures)
Funds under management
2009 CHANGECHANGE
Total premiums plus
Funds under management
Note: The previous figures are expressed in nominal values as is the change shown in the third column. The change
shown in the fourth column is expressed in real terms. The figures by line are not consolidated.
1
Unconsolidated revenues were 27,555 mdp in 2010 and 26,647 mdp in 2009.
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Products and Services
We continue to offer innovative and competitive products of great
value that also help our insured customers to maintain their
protection, even in times of crisis.
Individual Insurance
Seeking to accelerate achievement of Vision 2012, we continued our efforts
to spur innovation, which is a basic factor in driving continuous growth.
In addition to maintaining the support efforts launched the year before
aimed at preserving the portfolio in the Individual Life line of business, we
integrated an option to reduce the amount of insurance coverage under all
the flexible plans (Universal Platinum, Universal Privilege, Vision Plus and
Consolidated plans). This enabled us to offer a greater number of customers the opportunity to maintain their coverage even when their financial
condition was affected by the crisis.
In likewise fashion and to align our efforts with the needs of our insured
customers, we launched the following products:
•“Give life to your dreams”, a product that enables insured customers to
guarantee savings in the short term for a specific objective and, at the
same time, to protect them in the case of an emergency.
•“Look at the Future”, “Look at the Future with love” and “Transcend” are
a new range of products that offer limited payment terms of 5 to 10 years
for policies. Accordingly, this feature takes advantage of the economic bonanza of certain customers that have a source of substantial income that
guarantees their protection from now on and allows them to enjoy the
benefits in the future.
•“Live Secure - Live Insured”, a package of services directed at women
responsible for the safety of their homes, covers five types of ailments
that could interrupt the rhythm of their lives and offers a simpler contracting process.
Similarly in Medical Expense, there are three improvements to the Versatile Blue Line:
a) the option to increase the amount of coverage to avoid the perception
that it is insufficient,
b)more deductible options to facilitate renewal, and
c) more competitive rates.
2010 ANNUAL REPORT
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Corporate insurance
The Corporate Insurance area serves the needs for financial protection of
the variety of companies that do business in the country. This area offers
insurance services in the Medical Expense, Life and Casualty lines.
Given the fact that the distribution channels that we work with are very
different in terms of size (insurance brokers, offices and agents) and location, the sales area was restructured to provide more adequate service to
each channel.
On the other hand, we have continued with our strategic alliance for the development of international business in the Benefits for Employees program
with Insurope, a well known association with a worldwide presence in over
80 countries that concentrates on the more important and solid insurance
companies in the world.
We are working jointly with a number of companies in Latin America on
the configuration of the Iberoamerican Network of Insurers. With this organization, we are seeking to offer customers with global operations in
Latin America the option of having local insurance solution services in the
countries in the network.
2010 ANNUAL REPORT
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Automobile insurance
One of the greatest problems facing us this past year was the extraordinary
increase in automobile theft that reached historic levels in the country. This
situation has negatively impacted our results but we have taken a number
of measures in GNP among which the most noteworthy are modifications
to our subscription policies that enable us to control and mitigate deviations in losses and to improve the profitability of this insurance line.
In addition, we are working closely with the authorities so that together we
can reduce the indices of theft and increase the recovery of stolen units.
Similarly, we have made improvements in the areas of technical and operating efficiency so we will be able to return to optimal levels of productivity
and position our organization as one of the most representative of this line
of business.
Our Mexico in the
GNP SEGUROS
Future...Transpare
ncy will prevail
14
Our Mexico in the Future...We’ll all have access to education
2010 ANNUAL REPORT
15
Sales Force
Our Sales Force, agents, brokers and special agents are a key element
in GNP’s success.
Thanks to the synergies achieved with our Agency directors that are our
commercial partners and committed to our promotional strategies, GNP
was able to secure 8 of the 14 awards for its affiliates that were granted by
the Agency Promotion Association, A.C.: the George Holden Trophy. This
trophy is awarded to those who stand out in their performance in training professional insurance advisors. On this occasion, Manuel García de la
Garza and Eduardo Melito Hernández (directors of an associated agency in
Monterrey since 2003) were the winners of this trophy for the third time.
These associates have a portfolio of more than 160 mdp of Individual Life
Insurance and a client retention rate of 94%. With these results, they stood
out among 356 sales firms in the country.
Beyond doubt, the sales force has been one of the key elements in the success of GNP in recent years thanks to the enormous commitment of our
5,374 agents, brokers and specialized agents.
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Customer Service
Because of the impact of the earthquake in Baja California and
Hurricane Alex on our insured customers, GNP enacted a program
of immediate response and payment within 24 hours.
The insurance sector has been immersed in serious problems that constitute significant challenges today for our company. To this end, we have
created a great operating show of service to take care of our customers
who have suffered the effects of natural phenomena that resulted in losses
like the earthquake in Baja California that had great impact in Mexicali, and
Hurricane Alex that affected the cities of Reynosa, Tampico, Nuevo Laredo
and, principally, Monterrey.
The following actions stand out in this respect:
•A special program of immediate response and payment within 24 hours
was activated with the intention of enabling our insured customers who
were affected to respond more rapidly to the total loss of their automobiles and/or their personal belongings in their homes.
•GNP tripled collection quantities and was able to deliver 599.7 mdp to
the Red Cross for the purchase of packages of cooking utensils and hygiene items.
•In the finals of the soccer world cup in South Africa in 2010, the “Housing
Goal for Mexico” provided 300 housing units for people affected in the
states of Coahuila, Nuevo León and Tamaulipas.
•A full day was dedicated to “Goal for Veracruz” and raised the amount of
1.5 mdp.
On the other hand and as part of the process of improving service, for the
second consecutive year the program “A Day of Service. A day with you”
was launched through which we were able to learn the implications, impacts and needs of our customers as well as those of colleagues that carry
out the important work of attention, service and sales on a daily basis from
the viewpoint of processes, people, tools and services.
2010 ANNUAL REPORT
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GNP SEGUROS
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2010 ANNUAL REPORT
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Losses
The loss ratio declined by 1.7 percentage points in 2010 due
to our efforts to contain costs.
The loss ratio was 72.7% and 1.7 percentage points below the ratio registered the previous year (74.4%).
This result was the consequence of our continuous efforts to contain costs.
In particular, in the Medical Expense line we introduced the Optime Doctor
Circle – available in the Federal District, Monterrey and Guadalajara – in
which 212 doctors participated who are well known for their efficient practices in terms of cost and offering excellent service. With GNP, they are
committed to offering attractive benefits to our insured customers.
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Technical Results
Consolidated technical results in 2010 were 553 mdp and increased by
30.7% from 406 mdp in 2009. Analyzed in relation to premiums written,
thee figure reflect an increase of 0.5 percentage points on a total GNP consolidated basis.
GNP: TECHNICAL RESULTS BY LINE
(Index of Technical Results to premiums) %
Line
2010
2009
Index
Index
%
Life
(7.0)
(7.0)
0.0
Medical Expense and Accidents
Change
9.4
3.1
6.2
Automobile
(1.6)
2.4
(3.9)
Casualty
10.4
12.9
(2.5)
2.1
1.6
0.5
Total GNP
Note: figures by line are not consolidated.
2010 ANNUAL REPORT
21
Our Mexico in the Future...We’ll all be treated as equals
Increase in other Reserves
On a total GNP consolidated basis, premiums written increased
by 0.5 percentage points.
A total of 162.8 mdp were released from the Reserve for Catastrophic
Risks during 2010 as the result of a lower retention volume in earthquake coverage.
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Operating Efficiency
GNP continued to strengthen its technological infrastructure
to fulfill its service commitment to customers and intermediaries.
OPERATING EFFICIENCY
We continue to exert strict supervision over operating costs and this has permitted us to continue to improve our operating efficiency. In this regard, operating
costs show improvement in the ratio of Net Operating Costs to Premiums Written
of 0.4 percentage points in comparison to last year.
GNP: COMPARATIVE EXPENSES
(Ratio to premiums) % consolidated figures
Item
2010
Index
Index
%
Administrative expenses
10.3
10.6
(0.3)
Other operating expenses
(2.3)
(2.1)
(0.1)
Total operating costs
8.0
8.5 (0.5)
Expense adjustments
3.3
3.2 (0.0)
11.3
11.7
(0.4)
Total Expenses
2009change
Technological Infrastructure
With reference to our inventory of technological assets, Grupo Nacional Provincial
continued to strengthen its technological infrastructure in 2010 with a view to ongoing
improvement in the levels of service promised to our customers and intermediaries.
Among the various services offered by the systems areas to operations in GNP,
there is support and maintenance of 90 Mainframe applications as well as 250
client-server applications that process more than 2.5 million machine transactions daily as well as carrying out more than 97,000 batch processing tasks on
mainframes and client-servers and the printing of more than 4 million pages and
71,000 thermal impression cards.
Operations and service model
In the fiscal year just ended, we processed more than one million sales transactions involving premiums of 27,555 mdp as well as more than one million claims
involving total loss payments of 14,438 mdp. All of this was accomplished while
maintaining the standards of service and efficiency promised to our clients and
insured customers.
Internal Control
The institution is immersed in an undertaking that seeks to strengthen the internal control system and to be prepared for Solvency II to go into effect. For this
purpose, the international methodology known as Coso II / ERM is being put into
practice. This will enable us to follow up on our business strategy, monitor the
efficiency and efficacy of operations, validate the reliability of financial information and to make sure we comply with the laws and regulations that apply to the
company. Moreover, all of this will be added to our rendering of accounts that is
a fundamental initiative of our company.
2010 ANNUAL REPORT
23
Our Mexico in
the Future...O
urs will be the
GNP SEGUROS
best invention
s
24
Our Mexico in the Future...I’ll dance at the most important venues
2010 ANNUAL REPORT
25
Investments
The value of the investment portfolio showed growth of 10.43%
with respect to the previous year.
At the close of fiscal year 2010, the value of our investment portfolio totaled
9,591 mdp for growth of 10.43% over the prior year. This was due chiefly
to the favorable cash flow achieved throughout the year.
On the other hand, we experienced a substantial drop in interest rates during this period and financial income totaled 2,776.5 mdp at the close of 2010
for a drop of 8.7% with respect to the estimated budget figure prepared at
the same date last year. The decline can be explained as a consequence of
inflationary hedges against liability risks due to a period of deflation, by the
revaluation of investment assets and by additional financial income from
interest paid in dollars.
It is important to note that GNP kept ISO 9001:2000 certification in version
ISP 9001:2008 during 2010 for its investment process.
GNP SEGUROS
26
Results and Solvency
The solvency margin showed an improvement of 9.8% with respect
to 2009 in spite of the unfavorable conditions in 2010.
The consolidated profit generated in the insurance business in 2010 totaled 686
mdp. If the results of subsidiaries are included, net profit would be 687 mdp.
These amounts are similar to the budgeted figures but lower than those obtained
during 2009. The decline is the consequence of the fact that the combination of
lower sales and interest earned exceeded the benefit of better technical results,
a lower cost ratio and lower releases of reserves.
The intrinsic value of the Individual Life insurance portfolio, known as Embedded Value, totaled 4,337 mdp (utilizing a real interest rate of 10% for estimating
purposes) and was 50 mdp higher than the value reported at the close of the
previous year.
As a consequence, the company’s net worth, including the Embedded Value in
the Life insurance portfolio, came to 10,585 mdp. Based on the foregoing and
taking into consideration the utilization of the value creation method known as
Added Economic Value (Spanish acronym: VEA) by Grupo Nacional Provincial,
the actual annualized return on capital was 3%.
The results of the year permitted the solvency margin to reach 1,922 mdp, an
amount that represents an improvement 9.8% with respect to the prior year, and
increased the financial strength of GNP in spite of the unfavorable conditions that
prevailed in 2010.
2010 ANNUAL REPORT
27
Our Mexico in the Future...No one will waste
water
GNP SEGUROS
28
Our People
People are the most important thing in GNP so we continually
strive to support and improve working conditions.
The Transformation program that the company has been developing over three
years to align our actions with Vision 2012 has enabled GNP to strengthen the
distinctive culture of performance that it has been seeking to create.
The opening of the Talent Attraction portal on the Internet website of GNP
(www.gnp.com.mx) is noteworthy. This portal has become a strategic tool to
support our goal of attracting and retaining the most talented people that, in
turn, supports the positioning of GNP as a leading company in the labor market.
e will have a home
ryon
Our Mexico in the Future...Eve
2010 ANNUAL REPORT
29
We continued to give substantial impetus to training during 2010 and,
through these actions, we have reached increasingly broader levels of the
organization. As part of our efforts, 3,684 GNP employees and 209 people
in corporate affiliates received training involving a total of 108 courses
online and 224 course presentations.
The new “Code of ethics and conduct” was launched this year that
establishes the standards of conduct that govern all employees. This
document reinforces the culture of ethics and moral solvency of GNP
because it spells out the actions that are unacceptable in the company.
Under this Code, personnel certify their commitment to comply with the
code and to observe the values and standards that are set forth therein.
We are convinced in Grupo Nacional Provincial that our people are our most
important asset and we constantly look for ways to support and improve
the working conditions of all our employees. In this respect we recently
started up a transport service for the exclusive use of GNP personnel.
GNP SEGUROS
30
Our Mexico in the Future...We’ll be world cha
mpions
2010 ANNUAL REPORT
31
Social Programs
Our social program, Goal for Mexico, completed 6 years and reached
“Goal 5,000” with a celebration of the 5,000 people the program
has benefited.
Goal for Mexico
On the sixth anniversary of this program that is sponsored jointly with the
Televisa Foundation, we are proud to have reached and benefited 817,692
persons with satisfaction of their basic needs such as education, health,
nutrition and housing. At the end of 2010 the goal of 5,000 was added and
celebrated to the benefit of 5,000 persons with housing, nutritional packages, hearing aids and scholarships. In addition, the following campaigns
stood out:
•“Home Goal”: in the 2010 Soccer World Cup in South Africa through the
“Home Goal for Mexico” that provided 1,552 housing units in accordance
with the number on the shirts of those recording the goals.
•“Green Goal”: the matches in the selection rounds for the World Cup
meant 21,000 trees with a cumulative total of 48,000 trees planted.
•“Penalty Kick for Mexico” completed its fifth season this year. There are
currently 325 youths from the Mazahua and Tarahumara communities
with scholarships the past three years.
•“Goal for Haiti”: everything from a day of matches in the Mexican soccer
championship Was destined for Haiti. This involved a total of 1.6 mdp in
aid for that country.
GNP SEGUROS
32
Social Responsibility
GNP was certified as a Socially Responsible Company for the seventh
time and obtained certification as a Model of Gender Equity.
Today, corporate social responsibility, in addition to being a voluntary commitment, is a strategy that provides the company with a competitive advantage in
the short term and assures its survival in the long term. Social responsibility
harmonizes the economic objectives of companies with their values, principal
ethics and social and environmental impacts. GNP is an organization that is well
known for its high levels of fulfilling its goals and received the distinction of being
a Socially Responsible Company for the seventh time.
Similarly, we were awarded certification as a model of Gender Equity by the National Institute of Women. We were recognized with an approval rating of 97%
in terms of compliance which ranked us six percentage points above the rating
obtained in 2008. GNP ranks among the highest rated countries in the country. It
is important to note that our company was the first to receive this distinction in
the insurance sector and received recognition for the seventh consecutive year.
Grupo Nacional Provincial adheres to the Global Compact and has a grade of
B+ under the global methodology of the GRI (Global Reporting Initiative) in its
Corporate Social Responsibility Report.
2010 ANNUAL REPORT
33
e in harmony
l liv
Our Mexico in the Future...We’l
GNP SEGUROS
34
all be able to
l
’l
e
.W
..
e
r
u
t
ico in the Fu
Our Mex
2010 ANNUAL REPORT
space travel
35
“Living is incredible”
Advertising Campaign
We continue to strengthen our slogan “Living is incredible”
that recognized historically transcendent events last year.
We continue to give impetus to our slogan “Living is Incredible. We insure
you for it to remain so.” On this occasion, we responded to specific and historically transcendent events such as the 2010 Soccer World Cup in South
Africa and, specifically in our country, to the Bicentennial of Independence
and the Centennial of the Revolution.
GNP SEGUROS
36
Corporate Affiliates
Our corporate affiliates continued with their commitment
to strengthen our image and service to customers.
Complete GNP Medical Care
Today we have more than 40,000 customers with insurance coverage of all
their medical expenses. There were more than 383,000 services performed
in clinics in 2010.
In terms of results, premiums written in 2010 were 186.1 mdp, a decrease
of 18.6% with respect to the figure the year before due to the shortfall in
renewals by certain important accounts.
Net results similarly represented a loss of 94.0 mdp that compares unfavorably with the prior year because it reflects a decline of 168.0% due to the
drop in sales already mentioned in the previous paragraph and extraordinary expenses.
2010 ANNUAL REPORT
37
Our Mexico in the Future...We’l
l all help each other
Valmex Financial Solutions
In accordance with the strategy adopted for 2010, Valmex established a
budget for new business transactions that would result in moderate growth
and the recovery of the portfolio levels prior to the crisis over a period of
4 or 5 years.
As preventive measures to reduce the impact of the financial crisis in 20082009, it was decided to reduce the level of new business accepted during
2009 (70 mdp) and 2010 (150 mdp). This would have significant repercussions on the generation of revenue by causing an important decline in the
average balance of the current portfolio and, ultimately, on the revenues
and profits in 2010 and those forecast for 2011. Notwithstanding the foregoing, there was continued strict control over expenses and maintaining a
healthy company with low levels of past-due accounts in its portfolio.
The Fitch Rating agency ratified a corporate rating of A+ (mex) for the medium and long term and of F1 (mex) for the short term.
With reference to results, revenues of 37.9 mdp were obtained during 2010
that represented a decline of 29.4% in comparison to the previous year.
Net results achieved in 2010 of 5.5 mdp decreased by 52.4% in comparison
with the results of 11.5 mdp obtained in 2009.
GNP SEGUROS
38
Our Mexico in the Future...We’ll preserve our roots
2010 ANNUAL REPORT
39
Crédito Afianzador
Crédito Afianzador, S.A., Compañía Mexicana de Garantías, concentrates
on issuing surety bonds, principally in the Jjudicial and Administrative areas for companies in Grupo BAL and in the area of performance bonds for
GNP insurance agents. The institution, however, ceased to participate in
this latter line for the general public beginning in March 2009.
The fiscal year ended within the goals budgeted for profits and accomplished the actions aimed at maintaining the profitability of the business.
Likewise, there were developments derived from housecleaning in the
institution such as eliminating liability on surety bonds, releasing liability
reserves and transferring excess pension funds to the company’s assets.
Direct premiums in 2010 totaled 24.2 mdp that, upon comparison with the
level of 37.4 mdp obtained during 2009, represented a decline of 38.0%
due to the suspension of sales in the performance bonding line.
In terms of net results, there was a decrease of 12.2% comparing the results of 16.4 mdp in 2010 against the figure of 17.9 mdp in the prior year.
GNP SEGUROS
40
To the directors:
We have, and we assume, the responsibility of surpassing
financial results while maintaining solvency and strength at
the same time. Likewise, we propose to continue improving the service we provide to our customers. These are firm
commitments of the entire organization.
As I do each year, I want to thank the Chairman of the Board
of Directors, the Board of Directors and the Executive Committee for their valuable support and their wise counsel, and
our shareholders for the confidence they have shown in us.
Alejandro Baillères
Chief Executive Officer
Grupo Nacional Provincial, S. A. B.
2010 ANNUAL REPORT
41
GNP SEGUROS
42
Board of Directors
Chairman
Alberto Baillères
Regular DirectorsAlternate Directors
Alberto Baillères
(A)(B)(C)(2)
Jaime Lomelín
(4)
José Luis Simón (D)(3)
Emilio Carrillo (3)
Max Michel Suberville
(3)
Tomás Lozano
(3)
President of Grupo Bal, Chairman of the Board of Grupo Nacional Provincial, Profuturo GNP Afore, Profuturo
GNP Pensiones, Crédito Afianzador, Industrias Peñoles
and Grupo Palacio de Hierro
Chief Executive Officer
Fresnillo plc
Chairman of the Board Bufete Carrillo Gamboa, S.C.
Formas para Negocios
Chairman of the Board
Notary Public No. 10 del D.F.
Liverpool de México
Fernando Senderos
Raúl Obregón (3)(D)
Chairman of the Board of Directors and Executive Commitee Grupo Kuo, S.A.B. de C.V. y Dine, S.A.B. de C.V.
Chief Executive Officer
Alianza Estrategia y Gobierno Corporativo, S. C.
Carlos Orozco (A)(B)(C)(4)
Eduardo Silva
(4)
Norberto Domínguez
(D)(3)
Luis Aguilar
(3)
Raúl Baillères (4)
Alejandro Paredes
(4)
(3)
Corporate Director
Técnica Administrativa Bal
Chief Executive Officer
Domínguez y Asociados
Chief Executive Officer
Profuturo GNP- Afore
Independent Advisor
Manager of Sector Information Técnica Administrativa Bal
General Director - Planning and Evaluation
Técnica Administrativa Bal
Corporate Director Técnica Administrativa Bal
Director - Corporate Insurance
Grupo Nacional Provincial
(A)(C)(4)
Juan Ignacio Gil (4)
Juan Bordes Arturo Fernández (B)(C)(4)
Claudio Salomon (A)(C)(4)
Rafael Mac Gregor (A)(C)(4)
Alejandro Baillères (4)
Dolores Martin
(4)
Andreas Raczynski
(4)
Dean
Instituto Tecnológico Autónomo de México
Advisor
Técnica Administrativa Bal
Corporate Director
Técnica Administrativa Bal
Ricardo Acevo Area Director
Técnica Administrativa Bal
(4)
Carlos A. Zozaya (4)
Rafael Fronjosá
(4)
Director - Systems
Grupo Nacional Provincial
Director - Personal Insurance
Grupo Nacional Provincial
Alejandro Hernández
Chief Executive Officer
Grupo Nacional Provincial
(4)
Vice Dean
Instituto Tecnológico Autónomo de México
Corporate Director
Técnica Administrativa BAL
Octavio Figueroa
(A)(C)(4)
Gabriel Kuri
(4)
General Director - Administration and Finance
Técnica Administrativa Bal
Advisor of the President
Técnica Administrativa Bal
General Director - Financial Activities
Técnica Administrativa Bal
Regular Statutory Auditor
Alternate Statutory Auditor
Guillermo Babatz García
Secretary
(A)
(B)
(C)
(D)
Roberto Reyes Chávez
Jorge Siegrist Prado
Executive Committee
Evaluation and Compensation Committee
Finance and Planning Committee
Audit and Corporate Governance Committee
(1)
(2)
(3)
(4)
2010 ANNUAL REPORT
Independente Shareholder Director
Related Shareholder Director
Independent Director
Related Director
43
Organization Chart
Chairman of the Board of Directors
Don Alberto Baillères
Chief Executive Officer
Alejandro Baillères
Directors
Juan Ignacio Gil
Corporate Insurance
Rafael Fronjosá
Personal Insurance
Tonatiuh Gutiérrez
Automobile Insurance
Marcelo Hernández
Especially Businesses
Germán Aguado
Alternate Channels
Diego Durán
Efficiency
Héctor Anaya
Systems, Operations and Service
Carlos Zozaya
Systems
José Luis Gutiérrez
Finance
Jesús Zúñiga
Investments and Risk
Gabriel Corvera
Law
Alejandro Noriega
Human Resources
Diego Velázquez
Regulatory Controller
Edgar Cruz
Compliance Officer and Controller
GNP SEGUROS
2
CONTENT
ANNUAL REPORT
1
FINANCIAL HIGHLIGHTS
2
ANNUAL REPORT OF THE BOARD OF DIRECTORS TO THE SHAREHOLDERS
3
REPORT OF THE CHIEF EXECUTIVE OFFICER TO THE BOARD OF DIRECTORS
6
PRINCIPAL RESULTS
9
PRODUCTS AND SERVICES
10
SALES FORCE 15
CUSTOMER SERVICE
16
LOSSES
19
TECHNICAL RESULTS
20
INCREASE IN OTHER RESERVES
21
OPERATING EFFICIENCY
22
INVESTMENTS
25
RESULTS AND SOLVENCY
26
OUR PEOPLE
28
SOCIAL PROGRAMS
31
SOCIAL RESPONSIBILITY
32
“LIVING IS INCREDIBLE” ADVERTISING CAMPAIGN
35
CORPORATE AFFILIATES
36
BOARD OF DIRECTORS
42
ORGANIZATION CHART
43
INFORME ANUAL 2010
Grupo Nacional Provincial is part of the Grupo Bal, one of the most important and diversified
conglomerates in the country that consists of highly prestigious institutions:
Insurance Sector:
Grupo Nacional Provincial, S.A.B.
Médica Integral GNP, S.A. de C.V.
Médica Móvil, S.A. de C.V.
DESIGN & PHOTOGRAPHY: 33 VISUAL • ILLUSTRATIONS: FABIÁN GONZÁLEZ
MISSION, VISION AND VALUES
Pension Sector:
Grupo Profuturo, S.A.B. de C.V.
Estrategias Porvenir, S.A. de C.V.
Pensiones Profuturo GNP, S.A. de C.V.
Profuturo GNP, S.A. de C.V. Afore
Profuturo GNP Pensiones, S.A. de C.V.
Profuturo GNP Fondos, S.A. de C.V.
Sociedad Distribuidora de Acciones de Sociedades de Inversión
Profuturo GNP Préstamos, S.A. de C.V.
Financial Sector:
Crédito Afianzador, S.A., Compañía Mexicana de Garantías
Valmex Soluciones Financieras, S.A. de C.V., SOFOM, E.N.R.
Valores Mexicanos Casa de Bolsa, S.A. de C.V.
Commercial Sector:
Grupo Palacio de Hierro, S.A.B. de C.V.
Industrial Sector:
Industrias Peñoles, S.A.B. de C.V.
Fresnillo plc
Educational Sector:
Grupo Bal makes an important contribution to the education and development of trained
professionals through their philanthropic work, sponsoring
the Autonomous Technical Institute of Mexico (ITAM).
GNP SEGUROS
Grupo Nacional Provincial S.A.B.
Corporate Offices
2010 ANNUAL REPORT
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