2011 annual report

2011 ANNUAL REPORT GNP SEGUROS
2011 ANNUAL REPORT
Grupo Nacional Provincial S.A.B.
Corporate Offices
Av. Cerro de las Torres No. 395,
Campestre Churubusco, 04200, D.F.
Tel. 5227 3999
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Contents
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Grupo Nacional Provincial is part of Grupo Bal, one of the most important and diversified conglomerates in
the country composed of highly prestigious institutions:
IN THE INSURANCE AND BONDING SECTOR:
Grupo Nacional Provincial, S.A.B.
Médica Integral GNP, S.A. de C.V.
Crédito Afianzador, S.A., Compañía Mexicana de Garantías
IN THE MEDICAL SERVICES SECTOR:
Médica Móvil, S.A. de C.V.
DESIGN AND PHOTOGRAPHY: 33 VISUAL • PRINTING: EARTHCOLOR, HOUSTON
Mission, Vision and Values
Financial Highlights
Report of the Chairman of the Board of Directors
Report of the CEO to the Board of Directors
Sales
Losses
Products and services
Sales force
Customer service
Technical result
Operating efficiency
Investments
Results and solvency
Our people
Social programs
Social responsibility
Advertising campaign
Corporate affiliates
Board of Directors
Principal Officers
IN THE FUNDS MANAGEMENT SECTOR FOR RETIREES AND PENSIONS:
Grupo Profuturo, S.A.B. de C.V.
Profuturo GNP, S.A. de C.V. Afore
Profuturo GNP Pensiones, S.A. de C.V.
IN THE FINANCIAL SECTOR:
Valores Mexicanos Casa de Bolsa, S.A. de C.V.
Valmex Soluciones Financieras, S.A. de C.V., SOFOM, E.N.R.
IN THE COMMERCIAL SECTOR:
Grupo Palacio de Hierro, S.A.B. de C.V.
Tane, S.A. de C.V.
IN THE INDUSTRIAL SECTOR:
Industrias Peñoles, S.A.B. de C.V.
Fresnillo plc
IN THE EDUCATIONAL SECTOR:
Grupo Bal makes an important contribution to education and the development of professionals
through its philanthropic work and support for:
Instituto Tecnológico Autónomo de México, (ITAM).
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2011 ANNUAL REPORT
GNP SEGUROS
Our
mission
Our mission is to satisfy the needs of Mexican society for protection, financial security and
health services.
Our
vision
The vision of GNP defines four goals which we must focus on over 5 years. This vision is called
“1 in 4 in 5” and means being number 1 in 4 goals in 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 without sacrificing any particular goal to attain other goals.
Our
values
Business oriented
Results
Responsibility
Innovation
People oriented
Integrity
Collaboration
Passion
Loyalty
Service oriented
“We treat our customers as we would like to be treated as customers.”
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2011 ANNUAL REPORT
GNP SEGUROS
GRUPO NACIONAL PROVINCIAL, S.A.B.
Financial Highlights
(Consolidated Figures in millions of current pesos)
REAL
ITEM
20112010*
CHANGE
$$
%
TOTAL ASSETS
66,025 56,259
13.0
TECHNICAL RESERVES
52,397 43,942
14.9
NET WORTH (1)
6,516
6,148
2.1
SOLVENCY MARGIN
1,667
1,922
(16.5)
PREMIUMS AND FUNDS UNDER MANAGEMENT
32,448
28,285
10.5 EARNED PREMIUMS
31,695
27,734
10.1
TECHNICAL RESULT (2)
720
554
25.2
OPERATING EXPENSES
2,798
2,396
(12.5)
FINANCIAL INCOME
3,088
2,776
7.1
INSURANCE PROFIT
704
686
(1.1)
NET PROFIT
700
687
(1.9)
* Historical figures
(1) Net Worth, composed of Accounting Capital and Equity Reserves, plus the Embedded Value in the Life Insurance portfolio, totaled
11,049 and 10,585 million pesos in 2011 y 2010 respectively. (Note: Using an Embedded Value at a rate of 10%).
(2) Excluding Financial Expense in the Life Insurance segment, the Technical Result was 974 and 864 million pesos in 2011 and
2010 respectively.
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2011 ANNUAL REPORT
GNP SEGUROS
GRUPO NACIONAL PROVINCIAL, S. A. B.
Annual Report of the Board of Directors
To the Shareholders’ Meeting for fiscal year 2011
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.
The disequilibria in the international economy were not addressed adequately and were
manifested in the prevailing atmosphere of uncertainty that, in turn, was reflected in the
volatility of the financial markets. The Mexican economy achieved growth close to 4% but
was not exempt from the impact of the instability in international financial markets, particularly with respect to the reduced interest rates and the behavior and volatility of the
exchange rate. The insurance sector has suffered from these phenomena and had to adapt
to the behavior of exchange rates and a scenario of low interest rates that impacted financial income.
In GNP, we continue to strive to strengthen our competitive position through concrete actions aimed at developing new businesses, products and services for our customers. These
actions should enable us to maintain profitable growth across our full range of products and
to fulfill our mission of helping society to protect itself against the personal and property
risks to which it is exposed.
GNP completed 110 years of existence in 2011. The existence of a company for such a
prolonged period of time is unusual in economic history and this anniversary filled us with
pride and satisfaction. We took advantage of this event to reaffirm our vision and commitment to our shareholders, insured customers and employees.
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2011 ANNUAL REPORT
GNP SEGUROS
For the second time, GNP also received international recognition from World Finance, the prestigious English publication in international finance, as “the best insurance company in 2011 in Mexico and Central America”. This award
was bestowed for having the best business practices in the
market, for offering distinctive services to our customers,
and providing our employees with an integral program of
development, among other aspects.
As a reflection and expression of the social commitment of
GNP as a 100% Mexican company, GNP published its second
Report on Corporate Social Responsibility. In addition, it is important to note that GNP obtained the highest grade (A+) under the Global Reporting Initiative thanks to its commitment
to transparency in rendering its accounts to all its stakeholders.
GNP has continued to provide leadership to the national social movement, “Our Mexico of the Future” that, at the moment, has resulted in more than seven million positive messages in favor our country. We are pleased to know that so
many people express an encouraging vision that illuminates
the grandeur and future of Mexico. On dates coming up, we
will deliver to the various party candidates for the Presidency of the Republic, for their information or consideration,
a document with approximately ten million opinions from
Mexican citizens. With this step, we hope to make a positive
contribution to our political process.
With respect to financial results in fiscal year 2011, Grupo
Nacional Provincial sold premiums of 31,695 million pesos
(mdp), an increase of 10.1% in real terms in comparison to
the previous year. If Funds under Management are added
to this figure, revenues rose 10.5% over the prior year to
32,448 mdp.
This increase in sales was registered principally in the Life
and Medical Expense lines that had sales increases of 27.9%
and 4.5%, respectively over 2010. The sales posted by GNP
rank it as the second largest insurance company in the country in terms of sales with a market share of 12.3%.
The cost of losses as a percentage of premiums retained
and accrued came to 71%, two percentage points below the
figure registered the prior year. The design and implementation of a transformation program in the Automobile line
is noteworthy that will enable us to reduce the loss ratio by
eight percentage points to the lowest level seen in the last
five years (70% and 78% in 2011 and 2010, respectively).
The consolidated technical result was 720 mdp and 25.2%
higher in real terms than the result of 554 mdp obtained
in 2010. The technical result as a percentage of premiums
written in 2011 was 0.3 percentage points higher.
Operating expenses registered an improvement that is reflected in a lower ratio of net operating costs to premiums
written that was 0.5 percentage points lower in relation to
the year before as a result of cost control efforts and continuing process improvements. The company has to continue to strive to be more competitive in this area.
Financial income came to 3,088 mdp, a figure 7.1% higher
in real terms in comparison to the figure in the prior year.
These results were obtained in spite of the scenario of reduced interest rates and the volatility observed in the capital and foreign exchange markets.
Consolidated profit from the insurance business in 2011
totaled 704 mdp. By including the results of corporate affiliates, the resulting net profit would be 700 mdp which
is an increase of 1.8% and slightly higher in nominal terms
compared to 2010. Although this is not satisfactory to us,
it should be mentioned that results in 2011 were partially
impacted by investments in a series of strategic projects
whose benefits will accrue in future years. To evaluate the
financial performance of the company in greater detail, the
increase accrued in the intrinsic value of the Life Insurance
portfolio should be added. This is known as Embedded Value and totaled 96 mdp. In consequence, with this surplus,
the present value of the future profits from this business
comes to 4,533 mdp (using a real rate of interest of 10% in
the calculation).
The equity value of the Company is currently 11,049 mdp
and composed of the value of the accounting capital plus
the equity reserves of 6,516 mdp and 4,553 mdp from
the accrued profits in the Life Insurance Business. Lastly,
Grupo Nacional Provincial utilizes the so-called Aggregate
Economic Value as the valuation method for creating value
and, accordingly, the estimated real annualized profitability
of capital was 5%.
With these results, the solvency margin reached 1,667 mdp
and confirmed the financial strength of the company. This
strength is reflected in the ratings obtained by the Company from the rating agencies: Standard & Poors rated us
“mxAA+” (EXCELLENT) on the domestic scale and “BBB”
(VERY GOOD) on the international scale with a stable outlook. For its part, AM BEST, which specializes in insurance
companies, rated us “A-“ (EXCELLENT) with a stable outlook.
This positions the company at a competitive level compared
with other international companies.
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2011 ANNUAL REPORT
GNP SEGUROS
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 so that the report of the Chief Executive Officer
presented to this Shareholders’ Meeting reasonably reflects
the financial position and results of the Company.
The Board of Directors reviewed and ratified the resolutions
of the Executive Committee as well as the reports and results of the work program of the Regulatory Controller. Likewise, it reviewed and approved the Financial Statements of
the Company presented for the different periods in fiscal
year 2011. 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 2011.
Dear Shareholders:
In conformity with established policies, the performance of
senior management is evaluated annually. Each increase in
salaries and benefits must be authorized by the Nominating, Evaluation and Compensation Committee. Increases in
annual salaries and bonuses are determined on the basis
of the results obtained in performance evaluations. The
compensation package for senior management consists of
a base salary, benefits provided by law and other benefits.
The Board of Directors participated actively in the establishment of the strategies for the conduct of the business and
are aligned to Vision 2012 and also monitored the various
actions taken by the Company and its Corporate Affiliates.
In addition, the Board of Directors participated in other activities that are mentioned below because of their importance:
• It approved the creation of the Office of the Public and
Specialized Sector as the results of new organizational needs.
• It approved the new reinsurance programs for the Life,
Medical Expense and Casualty lines (that includes Automobiles and BPE as well as the Personal Accident line.
• It approved the launchings of the following products:
- In Life Insurance: “Total Consolidation”, “GNP Trusts”,
“Health in Life” and “Endowment Life”;
- In Medical Expense: “Large Family Coverage”, “World
Link”, “Family Strength”, as well as improvements in the
“’Versatile Blue Line” and “Blue Line Connection”;
- In Automobiles: “Solely Auto”, a new product that improves the value offer to customers and agents in an
integral manner; with this step, GNP demonstrated its
interest and commitment with the sale and growth of
these personal products.
The company improved in a number of performance criteria
but we are still not satisfied and are undertaking to redouble
our efforts to be more efficient and productive. 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.
In the name of the Board of Directors, I want to thank its
members and those of the Executive Committee for their
valuable support and our shareholders for the confidence
they have deposited in us and, after that, our employees for
their dedication and loyal performance in their daily work,
without which we would not have able to achieve the results being reported.
Alberto Baillères
Chairman of the Board of Directors
Grupo Nacional Provincial, S. A. B.
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2011 ANNUAL REPORT
GNP SEGUROS
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 2011
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 2011.
We made progress this year in consolidating new markets and improved a number of performance criteria. In particular, the Automobile Transformation Program stands out with
the technical result showing a significant improvement from a technical loss of 97.7 mdp to
a profit of 284.5 mdp.
Overall, there are some encouraging results for the year: premiums rose grew 10.1% in real
terms, technical results improved by 25.2% and profit was able to remain even with the
level of the prior year. This enabled us to channel substantial resources to growth projects
and improvements in operating efficiency. The progress achieved kept us on course toward
our long-term vision that is guiding our strategic efforts to consolidate the Company as the
leader in the insurance market in Profitability, Operating Efficiency, Customer Service and
Talent Retention.
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2011 ANNUAL REPORT
GNP SEGUROS
The results of our efforts are reflected in the ratings obtained from the various rating agencies:
Standard & Poors rated us “mxAA+” (EXCELLENT) on the domestic scale and “BBB” (VERY GOOD)
on the international scale with a stable outlook. For its part, AM BEST, which specializes in insurance companies, rated us “A-“ (EXCELLENT) with a stable outlook.
GNP, conscious of having the best conditions for the development of the country, continued to
provide leadership for the social movement, “Our Mexico of the Future”, an exercise in civilian
imagination and expression that invites all Mexicans to reflect and take action in favor of our
country. This movement was initiated in 2010 and is a source of pride because it enjoys the enthusiastic participation of citizens that joined this crusade; the movement has gathered more than
seven million positive messages about the future Mexico.
These messages will be compiled in a book called The Decree of Our Mexico of the Future that will
be delivered to the various candidates for the next Presidency of the Republic. With this initiative,
we are seeking to reiterate the social responsibility and commitment of GNP to Mexico.
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2011 ANNUAL REPORT
GNP SEGUROS
Sales
With respect to 2010,
the real increase in
consolidated revenues
came to 10.1%, in Life
Insurance 27.9% and in
GMM 4.5%.
Grupo Nacional Provincial had consolidated revenues of 31,695 million
pesos (mdp) in fiscal year 2011, which represented an increase of 10.1%
in real terms with respect to the prior year. Funds under management
totaled 753 mdp.
The Insurance line generated sales of 13,456 mdp for an increase of
27.9% in real terms with respect to sales of 10,133 mdp obtained in
2010. The growth was due in part to the policy for the Federal Public
Administration that was contracted in 2010 but only began to show its
effects in the following fiscal year.
A real increase in sales of 4.5% was achieved in Medical Expenses compared with the previous year.
The Automobile line showed production of 6,223 mdp in 2011 that represented a decline of 3.8% in real terms compared to the year before.
The pricing strategy was revised this year for the various products and
aligned to a strategy for growth and profitability.
The Casualty branch achieved sales of 2,222 mdp in 2011 that were 9.2%
lower in real terms than the figure obtained the prior year. The drop was
the consequence of the efforts made to serve the high value segments
primarily and results in the loss of certain accounts with low profitability.
GNP: SALES BY BRANCH (nominal figures)
mdp
mdp
%
%
Life
13,456
10,133
32.8
27.9
Medical Expense and Accident
9,588
8,838
8.5
4.5
Automobile
6,223
6,229
(0.1)
(3.8)
Casualty
2,222
2,356
(5.7)
(9.2)
31,695
27,734
14.3
10.1
Funds under Management
753
550
36.9
31.8
Total premiums plus Funds
under Management
32,448
28,285
14.7
10.5
* Figure includes revenues of affiliates of 206 mdp in 2011 and 178 in 2010.
1
Real
Change
2011
Total premiums
(consolidated figures)*
2010
Nominal
Change
Line
Unconsolidated revenues were 31,488 mdp in 2011 and 27,555 mdp in 2010.
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2011 ANNUAL REPORT
GNP SEGUROS
1962
In
Paquito, who dreamed of having his own car,
shared his best moments with his son.
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2011 ANNUAL REPORT
GNP SEGUROS
Today, grandfather Paco
can enjoy his grandchildren fully because he
planned how he wanted to live in retirement.
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2011 ANNUAL REPORT
GNP SEGUROS
Losses
The loss ratio decreased by 1.8 percentage points in this period thanks
to the efforts to improve enrollment and cost controls.
The important reduction in the loss ratio in the Automobile branch
stood out during the year that declined by around 8 points with respect to the prior year to a ratio of accrued premiums of 70%.
This was the product of the startup of the Transformation Plan aimed
at a substantial improvement in enrollment results and pricing in this
important branch.
On the other hand, actions to contain costs continued in the Medical
Expense branch through the consolidation of relationships and negotiating terms with the principal business generators in the branch such
as the medical network, hospitals and pharmaceutical groups.
The loss ratio fell by 1.8
percentage points with
the Automobile branch
standing out with a
reduction of about 8 points
in its loss ratio.
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2011 ANNUAL REPORT
GNP SEGUROS
Products and services
The Company continues to develop new value offerings that are competitive and in line
with the needs of our customers for protection.
PERSONAL INSURANCE
In the Life Insurance line, innovation is a fundamental part of our strategy. For this reason, the development of new products in the Individual Life Insurance line was carried
out with the following launches:
Total Consolidation, a retirement product with which the insured can create a savings
fund guaranteed not to lose value over time that permits the insured to enjoy the benefits of life insurance as well as innovative additional coverage;
GNP Trusts, that includes sales support, contractual ease, agility in processes and greater
operational support from these services;
Health in Life, a trust for people concerned about their health at retirement age by
reducing the risk of rising costs for medical expense coverage;
Endowment Life , that includes important advantages for the “Transcend” product because it a life insurance benefit for the insured as well as achieving savings objectives.
In addition, there was innovation in the offering of value in Medical Expenses with the
launching of the following products:
Coverage for Large Families in the VIP Blue Line;
World Link that permits one to access international medical expense coverage, a product that is ideal for people who travel abroad;
Family Strength is a unique product in the marketplace that covers families and not just
individuals and enables better insurance terms to be obtained;
Substantial improvements in the Versatile Blue Line with new deductibles, higher insured amounts and new coverage for reducing deductibles in accidents;
Blue Line Connection, now with new benefits because Médica Móvil coverage is now included as well as the option to be able to contract for Emergency coverage abroad.
13
In
1968
Eva decided to conquer her fear of the sea by learning
to surf, but not before having insurance protection if
there were any doubts.
2011 ANNUAL REPORT
GNP SEGUROS
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2011 ANNUAL REPORT
GNP SEGUROS
Today, grandmother Eva
can continue to enjoy her passion for the waves with
the security that her family is protected.
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2011 ANNUAL REPORT
GNP SEGUROS
CORPORATE INSURANCE
Fiscal year 2011 was characterized by the positioning of GNP in the business segments of Employee Benefits. The figures for premiums written
in the Life and Major Medical Expense lines confirm our leadership in
the insurance market, thanks to the efforts to be close and offer personalized services to our principal customers and in our distribution
channels. This situation is reflected in our indices for the retention and
issuance of new business.
The consolidation of the service structure directed to serving the public
sector also stands out in this area and will enable us to strengthen our
presence in this important market niche.
The program of “Health Management” was implemented during 2011
for workers in GNP and certain companies in Grupo Bal. This program
seeks to improve the quality of life of employees through timely detection and application of preventive health programs. This program is part
of the improvement in the offering of Major Medical Expense coverage.
On the other hand, in order to strengthen the offering of value, various products have been launched to serve mass markets. Among these,
“More Life” stands out in Life Insurance and “More Auto” in Automobile
insurance. Both products are designed for the market segment whose
protection characteristics respond to very specific needs.
AUTOMOBILE INSURANCE
To adapt the offer of value to the conditions demanded in the automobile market (that has increasingly demanding customers with widely
varying needs) and to cope with the high level of automobile theft,
during this year the pricing and enrollment models were modified and
this enabled us to launch an innovative value offer in the personal
insurance segment called “Solely Auto”.
Constant innovation in the value offered by our
products and services brings us ever closer to
our customers and enables us to satisfy their
needs more efficiently.
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2011 ANNUAL REPORT
GNP SEGUROS
Sales force
Without any doubt, our sales force – agents, brokers and specialized
agents – are key GNP elements because it is thanks to them and their
profound commitment that GNP is one of the largest and most diversified companies in the insurance sector.
For GNP, the entry of Mr. Carlos Bernard Morán into our Hall of Fame
in 2011 is a source of pride. The Hall of Fame, more than just a designation or recognition, pays homage to the members of our sales force
whose personal and professional conduct constitutes an example of
rectitude, honesty, integrity, professionalism, efficiency and, above all,
an unbreakable spirit of service.
GNP has 5,397 agents and specialized brokers today that personify great
entrepreneurs in their distinct specialties.
The profound commitment
of our sales force has
made us one of the most
competitive and diversified
companies in the sector.
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2011 ANNUAL REPORT
GNP SEGUROS
In
1986
Tavo graduated from high school and was able
to continue his university studies, thanks to the
education insurance that his parents took out when
he was a child.
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2011 ANNUAL REPORT
GNP SEGUROS
Today, my Uncle Octavio
is a teacher and teaches professionals who,
like him, can achieve their goals.
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2011 ANNUAL REPORT
GNP SEGUROS
Customer service
Service is one of the strategic elements for the Company. GNP currently
has 51 offices and 130 supervision centers as well as a call center with
the objective of satisfying the commitments the Company has assumed
to its customers in an efficient manner.
In the Automobile branch, centralization of the “Auto Cabins” was carried out through a single national call center. The process was also upgraded for serving claims adjustments, valuation, sale of salvaged vehicles and agencies with suppliers.
The success in the instrumentation of the portfolio of the Federal Public
Administration stands out because its size required a team dedicated to
satisfying its needs. It was also possible during the year to process more
than one and one-half million transactions that generated premiums
exceeding 31,000 mdp in addition to servicing more than one million
losses that involved expenses of 13,045 mdp.
For the third consecutive year, the “Day of Service” was held with great
success in which 256 ideas were received with the object of maintaining our service processes up to date for our customers and sales force.
Transactions in the portfolio of the Federal
Public Administration registered over 31,000
mdp in premiums.
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2011 ANNUAL REPORT
GNP SEGUROS
Technical Result
The Technical Result in 2011
experience real growth of
25.2% and the Automobile
line stood out with increase
of 6.1 points in the ratio of
premiums written.
The consolidated Technical Result in 2011 was 720 mdp compared with
554 mdp in 2010 for an increase of 25.2% in real terms. The ratio of the
Technical Result to premiums written in total operations improved by
0.3 percentage points. Again, the Automobile branch stood out with a
ratio that went from -1.6% in 2010 to 4.6% in 2011 for an improvement
of 6.1 points.
The Casualty branch experienced growth of 1.8 percentage points in
2011 and the ratio of technical results to premiums written reached
12.2% which was unquestionably a significant achievement.
GNP: TECHNICAL RESULT BY BRANCH
(Ratio of the Technical Result to premiums) %
Branch
Life
2011
2010
Change
Ratio
Ratio
%
(6.6)
(7.0)
0.5
Medical Expense and Accident
6.4
9.4
(2.9)
Automobiles
4.6
(1.6)
6.1
Casualty
12.2
10.4
1.8
Total GNP
2.3
2.0
0.3
Note: Figures by branch are not consolidated.
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2011 ANNUAL REPORT
GNP SEGUROS
In
1993
Lalo had the conviction that he would be an architect
and arranged savings insurance so that he could open
his own firm in the future.
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2011 ANNUAL REPORT
GNP SEGUROS
Today, cousin Eduardo
designs all kinds of structures in his own firm.
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2011 ANNUAL REPORT
GNP SEGUROS
Operating
efficiency
A program of operating
and technological
improvement was initiated
in 2011 to strengthen
service quality and our
operating efficiency.
In order to improve operating efficiency, the Company kept its commitment of strict observance over the control and supervision of operating expenses. The Company’s total operating expenses showed an
improvement in relation to premiums written of 0.5 percentage points
compared with the previous year.
GNP: COMPARATIVE EXPENSES
(Ratio to premiums %; consolidated figures)
Expense Item
2011
2010
Change
Ratio
Ratio
%
Administrative expenses
8.5
8.7
0.3
Other operating expenses
(1.2)
(1.5)
(0.3)
Total operating costs
7.2
7.2
0.0
Adjustment expenses
2.8
3.3
0.5
10.0
10.5
0.5
Total expenses
TECHNOLOGICAL INFRASTRUCTURE
An important program of operating and technological improvement
was initiated in 2011 with the objective of strengthening the operation
of key operational processes in the business as well as improving the
quality of the services provided to our customers and the quality of our
distribution channels.
During the year, we renewed 20% of the servers that process approximately 250 business and departmental applications. Information storage capacity was also expanded to 210 terabytes and 70% of the domestic network switches were replaced as well as two principal pieces
of equipment that support our national communications network.
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2011 ANNUAL REPORT
GNP SEGUROS
Investments
At the close of the fiscal year, the value of our investment portfolio totaled 52,556 mdp
for growth of 10.43% in real terms over the prior year.
Financial income was 3,088 mdp which represented a real increase of 7.1% with respect
to the prior year. These results were obtained in spite of the scenario of a reduction
in interest rates and the volatility observed in capital and foreign exchange markets.
We were also to keep ISO 9001:2000 certification under version ISO 9001:3008 during
2011 which reflects the efforts of employees to continue managing investments in an
efficient and transparent manner.
The volatile economic
scenario did not prevent
an increase in financial
income of 7.1% in
real terms.
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2011 ANNUAL REPORT
GNP SEGUROS
In
1996
Rafa liked mathematics but found them a little
complicated, it was his challenge...
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2011 ANNUAL REPORT
GNP SEGUROS
Today, my brother Rafa
conquers everything he sets out to do.
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2011 ANNUAL REPORT
GNP SEGUROS
Results and
solvency
The consolidated profit generated in the insurance business in 2001 totaled
704 mdp. Net consolidated profit was 700 mdp including the results of corporate affiliates. This is practically the same as the result in the prior year. The increase of 96 mdp in the intrinsic value of the Individual Life portfolio – known
as Embedded Value - should be added to the profit mentioned above. This
enables the value of the future profits of the business to reach the figure of
4,533 mdp (utilizing a real rate of interest of 10% for the calculation). Adding
this value to accounting capital and equity reserves totaling 6,516 mdp results
in an equity value of 11,049 mdp. Considering that Grupo Nacional Provincial
utilizes the method of value creation called Aggregate Economic Value (VEA),
the annualized return on capital was 5% in real terms.
These results produced a solvency margin of 1,667 mdp.
Considering that GNP utilizes the Aggregate
Economic Value method (VEA), the Company
reported an annualized profit on capital of 5% in
real terms in 2011.
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2011 ANNUAL REPORT
GNP SEGUROS
Our people
We are convinced in
GNP that training and
development opportunities
are of primary importance
in creating the best
working conditions.
Without doubt, the Company has created an environment so that whoever comes to work in GNP has all the support and is provided with all
the opportunities for development to enable her/him to carry out his/
her daily work with all the necessary enthusiasm and motivation.
A test of this involved the efforts made to align internal preventive
health practices with the policies established by the World Health Organization that promote increased physical activity and healthy eating
habits through the “World Strategy for Dietary Regimen, Physical Activity and Health”.
We are convinced in GNP that training is a fundamental element of the
Company’s operations. For this reason, 180 online courses and 263 personal attendance courses were given to 4,227 employees during the year.
It is important to highlight that there were 90 automobile service advisors (adjusters) certified under the competency standards, “Service for
Moving Collisions for Automobile insurance users” hosted by CONOCER
and endorsed by SEP. GNP has been the first company in the sector to
undertake this initiative.
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2011 ANNUAL REPORT
GNP SEGUROS
In
1998
Adriana was preparing herself to be a first
rate professional.
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2011 ANNUAL REPORT
GNP SEGUROS
Today, my sister in law, Adri
is a senior executive.
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2011 ANNUAL REPORT
GNP SEGUROS
Social programs
GOAL FOR MEXICO
The program that we co-sponsor with the Televisa Foundation, “Goal for
Mexico”, celebrated its seventh anniversary in 2011. Thanks to this program, more than 867,000 persons who live in substandard conditions have
been benefited through actions that provide assistance in nutrition, health,
education and housing. In addition, we have participated in special activities through this program:
2011 Gold Cup: this social cause is directed at education and 370 young
people from various states received scholarships for three years.
Penalty for Mexico: this program completed its seventh season this year.
There are currently 455 young people with 3-year scholarships from Mazahuas and Tarahumaras indigenous communities and the state of Oaxaca.
Pink Goals: in October, the program joined the world day for the fight
against breast cancer and, thanks to this, 400 mammograms were given to
Mazahuas women.
Goals for Tabasco: with the program that provides support for persons affected by the floods in Tabasco, 3,800 packages of staple foods were provided to 19,000 persons.
GNP HANDICAP ACCESS RAMPS
In a joint effort that demonstrates the great potential of agreements
among civil, private initiative and government associations to improve
social welfare, GNP sponsored the construction of 336 handicap access
ramps distributed among the 16 departments in the Federal District.
These actions contributed to the creation of an inclusive city and evidenced our commitment as a Socially Responsible Company.
PAN-AMERICAN GAMES
In support of education, GNP participated with social work in the 2011
Pan-American Games through the program, “Medals for Education”.
All the medals of Mexican sports figures were converted into training
scholarships for teachers. In total, 2,760 scholarships for teachers were
delivered from the medals obtained and an additional 137 scholarships
through social networks.
Goal for Mexico celebrated its seventh
anniversary by benefiting 867,000
needy persons.
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2011 ANNUAL REPORT
GNP SEGUROS
Social
responsibility
We were recognized as
a Socially Responsible
Company for the eighth
consecutive year and
also received the highest
grade from the Global
Reporting Initiative for our
transparency in rendering
our accounts.
SOCIAL SUSTAINABILITY RATING
GNP was awarded certification as a Socially Responsible Company for the
eighth occasion and was certified as a model of Gender Equity.
Corporate Social Responsibility is an element for GNP that gives viability
and permanence to the institution in the long term as well as being a factor to harmonize its objectives with the ethical principles it has adopted.
GNP has met its commitments in the social and environmental area as
shown by its second report on Corporate Social Responsibility.
It is important to point out that GNP obtained the highest grade (A+) from
the Global Reporting Initiative for its commitment to render its accounts
with transparency.
33
In
2001
Beatriz enjoyed her pregnancy with the tranquility of
knowing that she and her baby would have the best
medical attention and hospital care.
2011 ANNUAL REPORT
GNP SEGUROS
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2011 ANNUAL REPORT
GNP SEGUROS
Today, my sister Beatriz
has three beautiful boys that are already going
to school.
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2011 ANNUAL REPORT
GNP SEGUROS
Advertising
campaign
We also continued to use our slogan, “Living is Incredible”, during the
year and conducted competitive product campaigns to highlight product
characteristics: in Automobiles through the concept “Protect your car with
unique personalized coverage” and in the Casualty Housing area with “We
protect your greatest living moments in your house.”
Competitive advertising campaigns were
conducted to highlight the characteristics of our
products and to reaffirm the value of being the
largest insurance company in the country.
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2011 ANNUAL REPORT
GNP SEGUROS
Corporate Affiliates
GNP INTEGRAL MEDICAL
We performed more than 152,000 services in our clinics during 2011. At the end of the
year, however, it was decided to close the five clinics due to the fact that subrogation of
social security charges were not finalized and this eventuality has been foreseen since
they were opened. This development prevented us from achieving adequate scale to
assure the viability of the business.
Premiums written during 2011 were 213 mdp which represented an increase of 15%
compared to the level in the previous year due to the increase in group coverage accounts. There was a loss of 39 mdp in 2011.
MÉDICA MÓVIL
GNP remains the leading company in emergency medical attention with a high level
of quality in its services. Médica Móvil has contributed to an improvement in the
cost of losses involving insured customers under GNP Medical Expense and Integral
Medical programs.
During 2011, there were 53,894 service cases of which 4,748 were for Intensive Therapy,
28,974 for Home Care, 6,257 for Home Medical Consultations, 2,642 for Home Medical
Examinations and 11,273 for medical orientation services provided by telephone.
37
In
2003
my father bought me my first bicycle.
I learned to ride it in just one day!
2011 ANNUAL REPORT
GNP SEGUROS
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2011 ANNUAL REPORT
GNP SEGUROS
Today, after 10 years
I still enjoy cycling and dream of giving my daughter
a pink bicycle as a present.
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2011 ANNUAL REPORT
GNP SEGUROS
GNP SALVAGE MARKETING
In 2011, this company contributed to the improvement of GNP’s Automobile line with the sale of 12,546 cars involving losses and proceeds of 528
mdp. At the present time, GNP has 16 custody and auction centers throughout Mexico that are operating with very efficient and profitable processes.
VALMEX FINANCIAL SOLUTIONS
We are following our Business Plan to recover the levels of profitability within 4 years that existed prior to the crisis of 2009. During 2011,
growth in the portfolio remained constant and was reflected in an increase of more than 50.9% in net profits from 7 mdp in 2010 to 10 mdp
this year.
A rating of 8.2 was also obtained from CONDUSEF for compliance with
regulatory standards and Valmex ranked in third place in compliance in
the SOFOMES sector.
Vigilance and strict control over the portfolio was also maintained. The
past-due portfolio this year represented only 1.30% of the total portfolio. The Fitch Rating agency ratified the A+ (Mex) corporate rating for
the medium and long term and the F1 (Mex) rating for the short term.
CRÉDITO AFIANZADOR
This company continues to provide surety services to companies in Grupo BAL. Efforts directed at maintaining the profitability of the business
and optimizing the use of capital have permitted the payment of a dividend of 41 mdp and reimbursement of capital of 20 mdp. The net profit
in 2011 was 17.5 mdp that, compared with the prior year, represented
an increase of 6.9%.
The profound commitment of GNP to
its customers continues to be
strengthened, thanks to the support of
our corporate affiliates.
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2011 ANNUAL REPORT
GNP SEGUROS
To the Directors:
The results obtained indicate that the Company is on the
correct path to achieving its strategic vision and are an incentive to confirm our commitment and to continue increasing our financial results, levels of efficiency and the
strength of our solvency. Similarly, efforts will be maintained to continue improving the levels of services rendered
to our customers.
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.
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2011 ANNUAL REPORT
GNP SEGUROS
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2011 ANNUAL REPORT
GNP SEGUROS
Board of Directors
Chairman
Alberto Baillères
Proprietary Directors Alternate Directors
Alberto Baillères
(A)(B)(C)(2)
Chairman of Grupo Bal, Chairman of the Board of
Directors of Grupo Nacional Provincial, Grupo Profuturo,
Industrias Peñoles and Grupo Palacio de Hierro
Chief Executive Officer
Fresnillo plc
José Luis Simón Emilio Carrillo (D)(3)
Chairman of the Board
Formas para Negocios
Jaime Lomelín
(4)
(3)
Founding Partner
Bufete Carrillo Gamboa, S.C.
Max Michel Suberville
(3)
Tomás Lozano (3)
Honorary Chairman of the Board
Public Notary No. 10 D.F.
El Puerto de Liverpool
Fernando Senderos (3)
Chairman of the Board of Directors and the
Executive Committee of Grupo Kuo and Dine
Raúl Obregón (3)(D)
Chief Executive Officer
Alianza Estrategia and Gobierno Corporativo
Carlos Orozco (A)(B)(C)(4)
Corporate Director
Técnica Administrativa Bal
Chief Executive Officer
Grupo Profuturo
Eduardo Silva
Norberto Domínguez
(D)(3)
Trustee President
Asociación Mexicana de la Cruz Blanca Neutral
Luis Aguilar
Raúl Baillères (4)
Manager, Strategic Evaluation of Sectoral
Information, Technical Administration Bal
Alejandro Paredes
Corporate Director
Técnica Administrativa Bal
Director of Corporate Insurance
Grupo Nacional Provincial
(4)
(3)
Indpendent Consultant
(4)
General Director, Planning and Evaluation Area
Técnica Administrativa Bal
Juan Bordes (A)(C)(4)
Juan Ignacio Gil (4)
Arturo Fernández (A)(B)(C)(4)
Ricardo Acevo RectorDirector
Instituto Tecnológico Autónomo de México
Técnica Administrativa Bal
Claudio Salomon (A)(C)(4)
Consultant
Carlos A. Zozaya Rafael Mac Gregor (A)(C)(4)
Corporate Director
Técnica Administrativa Bal
Rafael Fronjosá
Alejandro Baillères (4)
Chief Executive Officer
Grupo Nacional Provincial
Alejandro Hernández
Dolores Martin
(4)
Director of Organizational Development
Técnica Administrativa Bal
Octavio Figueroa
Andreas Raczynski
Gabriel Kuri
(4)
(4)
Director of Systems
Grupo Nacional Provincial
(4)
Director of Personal Insurance
Grupo Nacional Provincial
(4)
Vice Rector
Instituto Tecnológico Autónomo de México
(A)(C)(4)
General Director of Administration and Finance
Técnica Administrativa Bal
(4)
Advisor to the Chairman
Grupo Bal
General Director of Financial Activities
Técnica Administrativa Ba
(4)
Statutory Auditor
Alternate 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
Auditing and Corporate Practices Committee
(1)
(2)
(3)
(4)
Independent Patrimonial Director
Related Patrimonial Director
Independent Director
Related Director
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2011 ANNUAL REPORT
GNP SEGUROS
Principal Officers
Chairman of the Board of Directors
Don Alberto Baillères
Chief Executive Officer
Alejandro Baillères
Principal Officers
Juan Ignacio Gil Antón
Corporate Insurance
Rafael Fronjosá Curco
Personal Insurance
Patricio José Margain Reyes Spíndola
Public and Specialized Sectors
Tonatiuh Gutiérrez Ramírez
Automobile Insurance
Germán Arturo Aguado Vanegas
Alternate Channels
Héctor Jesús Anaya Doll
Systems, Services and Operations
José Luis Gutiérrez Aguilar
Finance
Jesús Alfonso Zúñiga San Martín
Investments and Risks
Diego Durán Linares
Efficiency Unit
Carlos Antonio Zozaya Gorostiza
Systems
Juan Gabriel Corvera Caraza
Legal
Alejandro Noriega Besga
Human Resources
Jorge Alberto Guerrero Vidales
Strategic Planning
Diego Velázquez Graham
Regulatory Controller
Edgar Cruz Cruz
Compliance and Accounting Officer
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2011 ANNUAL REPORT
GNP SEGUROS
Contents
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2
3
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8
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12
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19
20
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28
31
32
35
36
42
43
Grupo Nacional Provincial is part of Grupo Bal, one of the most important and diversified conglomerates in
the country composed of highly prestigious institutions:
IN THE INSURANCE AND BONDING SECTOR:
Grupo Nacional Provincial, S.A.B.
Médica Integral GNP, S.A. de C.V.
Crédito Afianzador, S.A., Compañía Mexicana de Garantías
IN THE MEDICAL SERVICES SECTOR:
Médica Móvil, S.A. de C.V.
DESIGN AND PHOTOGRAPHY: 33 VISUAL • PRINTING: EARTHCOLOR, HOUSTON
Mission, Vision and Values
Financial Highlights
Report of the Chairman of the Board of Directors
Report of the CEO to the Board of Directors
Sales
Losses
Products and services
Sales force
Customer service
Technical result
Operating efficiency
Investments
Results and solvency
Our people
Social programs
Social responsibility
Advertising campaign
Corporate affiliates
Board of Directors
Principal Officers
IN THE FUNDS MANAGEMENT SECTOR FOR RETIREES AND PENSIONS:
Grupo Profuturo, S.A.B. de C.V.
Profuturo GNP, S.A. de C.V. Afore
Profuturo GNP Pensiones, S.A. de C.V.
IN THE FINANCIAL SECTOR:
Valores Mexicanos Casa de Bolsa, S.A. de C.V.
Valmex Soluciones Financieras, S.A. de C.V., SOFOM, E.N.R.
IN THE COMMERCIAL SECTOR:
Grupo Palacio de Hierro, S.A.B. de C.V.
Tane, S.A. de C.V.
IN THE INDUSTRIAL SECTOR:
Industrias Peñoles, S.A.B. de C.V.
Fresnillo plc
IN THE EDUCATIONAL SECTOR:
Grupo Bal makes an important contribution to education and the development of professionals
through its philanthropic work and support for:
Instituto Tecnológico Autónomo de México, (ITAM).
2011 ANNUAL REPORT GNP SEGUROS
2011 ANNUAL REPORT
Grupo Nacional Provincial S.A.B.
Corporate Offices
Av. Cerro de las Torres No. 395,
Campestre Churubusco, 04200, D.F.
Tel. 5227 3999
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