OUR OPERATIONS

OUR OPERATION

Authorized by the National Insurance and Bonding Commission, Reaseguradora Patria carries out various reinsurance and reinsurance activities. These activities are negotiated both directly and through reinsurance intermediaries with domestic and foreign insurance and reinsurance institutions.

By the end of 2023, Grupo Peña Verde’s international presence includes Mexico, Chile, the United Kingdom and the United States

Within the framework of its Corporate Governance, Grupo Peña Verde has implemented a Comprehensive Risk Management System in order to maintain the necessary flexibility to anticipate emerging risks that could impact its operations, considering its participation in the Insurance and Reinsurance areas. This system encompasses the essential objectives, policies and procedures for comprehensive risk management, aligned with Grupo Peña Verde’s business plans. It also includes the fundamental processes and procedures to supervise, manage, measure, control, mitigate and report on an ongoing basis on the risks, both external and internal, to which the Group may be exposed, both individually and in the aggregate.

Comprehensive Risk Management:

In order to carry out this crucial task, the Risk Committees of all the companies belonging to the Group meet on a monthly basis. During these meetings, they submit reports on the status of risks to the General Management and the Board of Directors, who are responsible for defining the actions to be taken in this regard. It is also imperative to maintain optimal communication with:

1. Risk owners (underwriting, investments, operations, etc.);
2. The areas in charge of event detection, mitigation or prevention (administration, reinsurance, systems, etc.) and;
3. Authorities (regulatory, academic or expert) that may introduce new treatments for existing risks or even discover new risks.

For this system to work properly, the participation of all employees is necessary. For this reason, as part of the onboarding process, training is provided to learn about the different ways in which employees participate in this system, and together we promote an effective risk culture.

Likewise, there are mechanisms for periodic communication of risks between the areas as well as collaboration in the qualitative and quantitative analysis of risks for new products, businesses, investments or strategies proposed in the Group.

Although we have identified the various risks to which both the Group as a whole and its subsidiaries are exposed, it is considered highly unlikely that all of them will occur simultaneously, due to the correlation between them. For this reason, Grupo Peña Verde classifies these risks according to their potential impact, as presented below:

In order to ensure sound risk management, each Company’s Board of Directors has set exposure limits for the following risks:

It is crucial to highlight that there are emerging risks with a high degree of uncertainty, capable of causing losses that are difficult to quantify accurately. These eventualities could threaten the Company’s solvency and/or compromise the achievement of its business plan, should they materialize. For this reason, Grupo Peña Verde takes all appropriate measures to mitigate as much as possible any potential impact.

In this context, by identifying emerging risks such as climate change, the Company has made considerable efforts to incorporate best practices in environmental and social terms, aspiring to stand out as a benchmark in aspects such as Human Rights, Labor Standards, Environment and the fight against corruption. For this reason, since October 2020, the Group has actively participated in the main corporate sustainability initiative worldwide: the United Nations Global Compact.

In addition, beginning in 2022 Grupo Peña implemented a new measurement methodology and quantification of its operational risks according to a standard risk taxonomy which complies

with risk management based on ISO 31000; with this the Company expects to strengthen the visibility and monitoring of indicators that help mitigate and manage the operational risks of the institutions that make up the Group.

On the other hand, quantitative regulatory analyses are proposed, such as the Dynamic Solvency Test, which identifies possible deviations in premiums, loss ratio, costs and financial product, caused by external phenomena such as an increase in catastrophic events, so that risks, opportunities and mitigation measures can be identified.

During 2023, as a result of the transformation that Grupo Peña Verde is undergoing, new ways of obtaining competitive advantages and making processes more efficient were sought. In addition, in response to the Audit Committee’s request to strengthen the Internal Control area, contributing to the strengthening of Corporate Governance and the Internal Control System, the Corporate Internal Control Department was created to:

Improve the Company’s processes through the establishment of controls and alignment with business risks; and,

Establish formal monitoring mechanisms for the resolution of deviations in the functioning of the Internal Control System, as well as the homologation of COSO & COBIT5 methodologies at Group level.