CONTENT MISSION, VISION AND VALUES 1 FINANCIAL HIGHLIGHTS 2 ANNUAL REPORT OF THE BOARD OF DIRECTORS TO THE SHAREHOLDERS 3

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2 2 CONTENT ANNUAL REPORT MISSION, VISION AND VALUES 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

3 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

4 2 GRUPO NACIONAL PROVINCIAL, S.A.B. Financial Highlights (Figures in millions of pesos in purchasing power at December 31, 2010) CONCEPT 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, PREMIUMS AND FUNDS UNDER MANAGEMENT 28,285 27,404 (1.1) PREMIUMS WRITTEN 27,734 26,863 (1.1) TECHNICAL PROFIT(2) 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 ANNUAL REPORT

5 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 Grupo Nacional Provincial, S. A. B. 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. 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 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

6 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. 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. The decrease in sales can be explained principally by the declines of 1.2% and 15.4% in sales in the Automobile and Casualty lines, respectively, from the levels of sales in 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 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. 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 Consolidated profits generated by the insurance business in 2010 totaled 686 mdp, 2010 ANNUAL REPORT

7 5 an amount in line with our budget but less than in 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 As a consequence, the accounting net worth of the company was 6,148 mdp at the close of If the intrinsic value of the Individual Life portfolio is added in, calculated under the Embedded Value 1 methodology, the economic net worth of the company increases to 10,585 mdp. These figures indicate the financial strength of the company. 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. 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 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. 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 Dear Shareholders: 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

8 6 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 Chief Executive Officer Grupo Nacional Provincial, S. A. B. 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. 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 ANNUAL REPORT

9 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

10 8 Our Mexico in the Future...I ll be President 2010 ANNUAL REPORT

11 9 Principal Results The Life and Major Medical Expense lines showed increases in sales of 1.8% and 0.7%, respectively in 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 before 1. 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 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 CHANGE CHANGE mdp mdp % % Life 10,133 9, Medical Expense and Accidents 8,838 8, Automobile 6,229 6, (1.2) Casualty 2,356 2,666 (11.6) (15.4) Total premiums (Consolidated Figures) 27,734 26, (1.1) Funds under management (2.5) Total premiums plus Funds under management 28,285 27, (1.1) 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 GNP SEGUROS

12 10 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 ANNUAL REPORT

13 Our Mexico in the Future...I ll have a beautiful family 11 GNP SEGUROS

14 12 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 ANNUAL REPORT

15 13 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 Future...Transparency will prevail GNP SEGUROS

16 14 Our Mexico in the Future...We ll all have access to education 2010 ANNUAL REPORT

17 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. GNP SEGUROS

18 16 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 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 ANNUAL REPORT

19 17 Our Mexico in the Future...Caring for nature will be our priority GNP SEGUROS

20 18 Our Mexico in the Future...Cars won t pollutte 2010 ANNUAL REPORT

21 19 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. GNP SEGUROS

22 20 Technical Results Consolidated technical results in 2010 were 553 mdp and increased by 30.7% from 406 mdp in 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 Change Index Index % Life (7.0) (7.0) 0.0 Medical Expense and Accidents Automobile (1.6) 2.4 (3.9) Casualty (2.5) Total GNP Note: figures by line are not consolidated ANNUAL REPORT

23 21 Increase in other Reserves Our Mexico in the Future...We ll all be treated as equals On a total GNP consolidated basis, premiums written increased by 0.5 percentage points. A total of mdp were released from the Reserve for Catastrophic Risks during 2010 as the result of a lower retention volume in earthquake coverage. GNP SEGUROS

24 22 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 change Index Index % Administrative expenses (0.3) Other operating expenses (2.3) (2.1) (0.1) Total operating costs (0.5) Expense adjustments (0.0) Total Expenses (0.4) 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 ANNUAL REPORT

25 23 Our Mexico in the Future...Ours will be the best inventions GNP SEGUROS

26 24 Our Mexico in the Future...I ll dance at the most important venues 2010 ANNUAL REPORT

27 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

28 Results and Solvency 26 The solvency margin showed an improvement of 9.8% with respect to 2009 in spite of the unfavorable conditions in 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 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 ANNUAL REPORT

29 27 Our Mexico in the Future...No one will waste water GNP SEGUROS

30 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 ( 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. Our Mexico in the Future...Everyone will have a home 2010 ANNUAL REPORT

31 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

32 30 Our Mexico in the Future...We ll be world champions 2010 ANNUAL REPORT

33 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

34 Social Responsibility 32 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 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 ANNUAL REPORT

35 33 Our Mexico in the Future...We ll live in harmony GNP SEGUROS

36 34 Our Mexico in the Future...We ll all be able to space travel 2010 ANNUAL REPORT

37 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

38 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 In terms of results, premiums written in 2010 were 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 ANNUAL REPORT

39 37 Our Mexico in the Future...We ll 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 , 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 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 GNP SEGUROS

40 38 Our Mexico in the Future...We ll preserve our roots 2010 ANNUAL REPORT

41 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 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

42 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 ANNUAL REPORT

43 41 GNP SEGUROS

44 42 Regular Directors Board of Directors Chairman Alberto Baillères Alternate Directors Alberto Baillères (A)(B)(C)(2) Jaime Lomelín (4) 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 José Luis Simón (D)(3) Emilio Carrillo (3) Chairman of the Board Formas para Negocios Bufete Carrillo Gamboa, S.C. Max Michel Suberville (3) Tomás Lozano (3) Chairman of the Board Liverpool de México Notary Public No. 10 del D.F. Fernando Senderos (3) Raúl Obregón (3)(D) Chairman of the Board of Directors and Executive Chief Executive Officer Commitee Grupo Kuo, S.A.B. de C.V. y Dine, S.A.B. de C.V. Alianza Estrategia y Gobierno Corporativo, S. C. Carlos Orozco (A)(B)(C)(4) Eduardo Silva (4) Corporate Director Técnica Administrativa Bal Chief Executive Officer Profuturo GNP- Afore Norberto Domínguez (D)(3) Luis Aguilar (3) Chief Executive Officer Domínguez y Asociados Independent Advisor Raúl Baillères (4) Alejandro Paredes (4) Manager of Sector Information Técnica Administrativa Bal General Director - Planning and Evaluation Técnica Administrativa Bal Juan Bordes (A)(C)(4) Juan Ignacio Gil (4) Corporate Director Técnica Administrativa Bal Director - Corporate Insurance Grupo Nacional Provincial Arturo Fernández (B)(C)(4) Ricardo Acevo (4) Dean Instituto Tecnológico Autónomo de México Area Director Técnica Administrativa Bal Claudio Salomon (A)(C)(4) Carlos A. Zozaya (4) Advisor Técnica Administrativa Bal Director - Systems Grupo Nacional Provincial Rafael Mac Gregor (A)(C)(4) Rafael Fronjosá (4) Corporate Director Técnica Administrativa Bal Director - Personal Insurance Grupo Nacional Provincial Alejandro Baillères (4) Alejandro Hernández (4) Chief Executive Officer Grupo Nacional Provincial Vice Dean Instituto Tecnológico Autónomo de México Dolores Martin (4) Octavio Figueroa (A)(C)(4) Corporate Director Técnica Administrativa BAL General Director - Administration and Finance Técnica Administrativa Bal Andreas Raczynski (4) Gabriel Kuri (4) Advisor of the President Técnica Administrativa Bal Regular Statutory Auditor Guillermo Babatz García General Director - Financial Activities Técnica Administrativa Bal Alternate Statutory Auditor Roberto Reyes Chávez Secretary Jorge Siegrist Prado (A) Executive Committee (1) Independente Shareholder Director (B) Evaluation and Compensation Committee (2) Related Shareholder Director (C) Finance and Planning Committee (3) Independent Director (D) Audit and Corporate Governance Committee (4) Related Director 2010 ANNUAL REPORT

45 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

46

47 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 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).

48 Grupo Nacional Provincial S.A.B. Corporate Offices Av. Cerro de las Torres No. 395, Campestre Churubusco, 04200, D.F. Tel Printed on papel containing recycled fiber PRINTED USING 100% WIND ENERGY Supplied by Community Energy