GROUPAMA / 2018 Registration document

RISK FACTORS AND RISK MANAGEMENT RISK FACTORS

In this framework and pursuant the financial solidarity plan existing between the regional mutuals and Groupama Assurances Mutuelles (“solidarityagreement”,see section 1.2.3– Relationships among the various entities of the Group in this registration document), a contribution in the form of a subsidy, participating shares, or a loan could be put in place if their equity and/or results did not allow them to meet their commitmentsand obligations for the long term. Similarly, at the subsidiary level, the Group – and especially Groupama AssurancesMutuelles –could grant financing resources allowing subsidiaries to improve their solvency margin, particularly through modifications in the dividend policy, capital increases, or intra-group subordinated loans. In 2018, the Group carried out capital operationstwo international subsidiaries. These various measures could also have a significant impact on the state of liquidity, consolidated net income, and financial position of Groupama Assurances Mutuelles and the Group. Finally, when rating agencies assess Groupama SA’s financial strength and credit quality, they take into account the Group’s solvencymargin and the regulatory capital position of its insurance subsidiaries. In order to comply with the financial solvency criteria of the rating agencies, the policy of holding risky assets remains relatively restrictive. Although Groupama has set up systems to ensure sufficient solvency for itself and its subsidiaries, unfavourablecapital market conditions, the evolving interpretation of regulations, and the changes in the rating agencies’ criteria could adversely affect its activities, liquidity position, credit rating, consolidated net income and financial position. Revision of ratings regarding ability 5.1.2.4 to pay claims and financial strength In 2017, the financial strength rating of Groupama Assurances Mutuelles was revised upwards from BBB+ to A- by the financial rating agency Fitch Ratings. In 2018, the A- rating was confirmed, and the outlook wasraised from stable to positive. Ratings of ability to pay claims and financial strength remain important although disputed factors in establishing the insurance companies’ competitive position vis-à-vis each other. However, rating agenciesmay revise them at any time. A downward revision of the financial rating could have an adverse impact on the Group, such as (i) harming its competitive position, (ii) negatively affecting its ability to underwrite new insurance policies, (iii) increasingthe surrenderor terminationrates of existing insurance policies, (iv) increasing the cost of reinsurance, (v) negatively affecting its ability to obtain financing and/or increasing the cost of financing, (vi) triggering the need for additional guaranteesunder certain agreements,(vii) harming its relationships

with creditors or trading counterparties and/or (viii) adversely affecting public confidence in a material way. Any of the above could have an adverse effect on the activities, liquidity position, consolidated net income, revenue and financial position of Groupama Assurances Mutuelles. Losses due to defaults by financial 5.1.2.5 institutions and third parties, impairment of investment assets and unrealised losses Third parties that owe Groupamamoney, securitiesor other assets may not perform their obligations. These parties may be issuers whose securities the Group holds in its investment portfolios, public or private borrowers under mortgages and other loans extended, Groupama reinsurers, customers, trading counterparties, hedge counterparties, other third parties including intermediaries and brokers, commercial banks, hedge funds and other investment funds, clearing agents, market exchanges, clearing houses and other financial institutions (see Bond portfolio breakdown by rating and nature of issuers – Note 7.8.3 – Bond portfolio – by rating and Note 7.8.4 – Bondportfolio – by nature of bond issuersto the consolidated financial statements). Third-party default may also concern third parties with which Groupama has entered into service agreements as part of the outsourcing of activities and may expose the Group to operating, financial andreputation risks. Similarly, default, and even the fear of default, on the part of major third parties external to Groupama may also disrupt the markets, increase their volatility, generate a chain of defaults or even lead to widespread illiquidity, which would affect the Group or could affect its partners. The causes of default by third parties may include: bankruptcy, lack of liquidity, downturns in the economy or real estate market, worsening ofthe financial marketsor operationalfailures. Although in recent years the Group has continued its operationsto reduce risk on equities and the most exposed debts, exposure to Italian and Spanish sovereign debt remains significant (see Note 7.9 – Debt securities of peripheral countries of the eurozone to the consolidated financial statements). Consideringthe increase in the cost of sovereign debt in the most vulnerable countries (cost of financing in real terms exceeding the rate of growth) and the intrinsic volatility of equity markets, Groupamamay need to recognise impairment losses on the value of its invested assets. Groupama cannot, under any circumstances, guarantee that such losses or impairments of the accounting value of these assets would not sharply and adversely affect its netincome andfinancial position.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES