Quálitas Controladora B de C : » CEO report

March 25th, 2022

Dear shareholders,

Welcome to this General Shareholders' Meeting session of Quálitas Controladora for the review of audited results corresponding to 2021.

Fourth quarter closed with a net result of $808 million pesos, and annual net result of $3,778 million pesos, representing a drop in comparison to the extraordinary performance during 2020, where claims experience was reduced to levels never seen before due to the pandemic impact in the mobility trends, coupled with the partial economic shutdown. Nonetheless, we already anticipated the claims comeback to priors'

years levels.

2021 could be characterised as a normalization and transition year where we observed a recovery in the mobility trends above prepandemic levels, a slow recovery in the sale of new cars, impacted by the shortage in the supply chain, inflationary pressures, coupled with a highly competitive tariffs environment in the industry.

Despite the above, written premiums had a fall of 0.7% during the fourth quarter, and a 6.3% increase for the full year. Our international and vertical subsidiaries grew 41.0% during the quarter, achieving a sound annual growth of 29.5%, being a growth engine for the holding company.

The role of the subsidiaries continues to be increasingly relevant; as of 2012 they represented 8.5% out of the total holding company production. As we have mentioned before, we are focused on caring the growth-profitability relationship in each one, mainly in our USA subsidiary we continue to expand our coverage network, allowing us to position as the best insurance company within each of these countries.

We celebrate that out agent's network continues to grow, being the most extensive, adding 1,560 new agents during 2021 amounting more than 18,500 for the full year. Likewise, the complex environment we are living in did not halt our expansion; we opened 9 service offices and 22 ODQs, highlighting Peru with the opening of 3 new offices, aiming to have representation where the agents and insured needs us.

Concerning our costs, claims ratio for the quarter stood at 70.0%, whereas full year ratio stood at 65.0%. These ratios consider the accounting changes due to Flekk consolidation, where its cost of goods sold are reflected within claims; the impact of the revised consolidation in the loss ratio is of 1.6 percentage points. However, such ratios reflect the increase in frequency and average cost of claims, trends that we will closely monitor.

The comprehensive investment income for the quarter and 2021 year stood at $620 and $2,273 million pesos, respectively, with a total return of 4.5%. The challenging environment that we are currently facing operating-wise forces us to look for better financial profits in our investment portfolio; we will take advantage in the rates hikes.

In order to maintain solid results, it will be fundamental to continue with the cost control, as well as adjusting tariffs allowing us to keep sound ratios. In addition, we will continue to grow our competitive advantages, which is instrumental to remain as the number one preference for our customers.

Holding company's equity closed above $20 million pesos for the first time in our history, whereas the 12-month return on equity stood at 19.2%, reflecting the normalization in net profits.

Following with topics relating to the organization structure, our headcount grew by 3%, in order to serve the increasing number of insured units, as well as the increase in claims, above prepandemic levels. We will continue implementing partial home office due to the contingency, and we are currently assessing options to be productive, while we focus on the business continuity.

Eventually, one year ago from the passing away of Joaquín Brockman Lozano our founder, I would like to reinforce my personal commitment, as well as that of the entire organization to honor its legacy through continue increasing the focus on service excellence and costs control, which has positioned us as the best auto insurance company in Mexico. In this regard, I also thank to the Board of Directors and employees for their support throughout this transition year and with whose continuous support we will continue to be the undisputed leaders in the sector.

Sincerely,

José Antonio Correa Etchegaray Chief Executive Officer

Quálitas Controladora S.A.B. de C.V.