GROUPAMA / 2018 Registration document

5 RISK FACTORS AND RISK MANAGEMENT RISK MANAGEMENT AND SENSITIVITY ANALYSES The rulesfor establishingreserves forclaims and the fundingtables for life and non-life disability payments are defined within the Insurance Divisions in guidelines that are harmonised for all Group entities. Reserves are evaluatedby the claims Managerswithin the operational entities and, if necessary, are supplemented by reserves for losses that have occurred but have not yet been declared. The calculation of technical reserves in life insurance and certain technical reserves in non-life insurance is also based on the use of an interest rate known as the “underwriting interest rate”, the conditions of which are fixed in France by the Insurance Code. In France, the terms of this rate are set by the InsuranceCode, which determines a maximum level by reference to the average rate for governmentborrowings(the T.M.E.). which is used to set rates for policies and calculate the insurer’s commitmentsto policyholders.

The terms and conditionsvary based on the type of policy and the duration of thecommitments. The reserving standardsas well as the principles of measuringand controlling reserving risk are specified in the Group underwriting and reserving policies. The breakdown of technical reserves and life and non-life insurance policies is presented in Note 25.1 to the annual financial statements. Breakdown of actuarial reserves according to the criteria of commitments at fixed rate, variable rate, or absence of rate commitments The breakdown of actuarial reserves based on fixed-rate, variable-rate ( i.e. , tied to a market rate) or no rate commitments was as follows:

31.12.2018

31.12.2017

France

International

Total

Total

(in millions of euros)

Commitments guaranteedat fixed rate

36,085

2,699

38,784

39,463

Commitments guaranteedat variable rate

7,700

21

7,721

7,755

Unit-linkedandotherproductswithoutrate commitment

9,323

938

10,261

10,587

TOTAL

53,108

3,658

56,766

57,806

Terms and conditions of the 5.2.2.3

The weight of guaranteed-rate commitments continues its slow decline. The share of unit-linked and other products without rate commitmentdecreased,representing18.1% of total commitments (versus 18.3%at the endof 2017). Reinsurance (d) Reinsurance is organised on two levels. The Internal Reinsurance performed by Groupama Assurances Mutuelles for all Group entities is designed to optimise retentions for each entity. The external reinsurancedefines the optimum reinsurancestructure for the Group and the level of risk coverage on the bases of computer models. External reinsurance contracts are renegotiated and renewed each year by Groupama AssurancesMutuelles on behalf of the entire Group. Moreover, selection rules defined in the securities in reinsurance committee, which is composed particularly of the External Outward Reinsurance Division of Groupama Assurances Mutuelles and the Group Risk Management Department, which are based on the ratings from ratings agencies, are designed to control the default risk of reinsurers. The list of reinsurers is reviewed in its entirety at least twice a year. During the year, continual monitoring is performed to adapt the internal ratings of the reinsurers to changes that may occur to them that would modifytheir solvency assessment. Approved reinsurers must have a rating compatible with the type of business reinsured, depending on whether they have a short or long accountingrun-off. The reinsurance principles and arrangementsare described in the Group reinsurance policy.

insurance policies which have a material impact on the amount, maturities, and uncertainty of the insurer’s future cash flows

General description (a) The Group offers a broad range of non-life insurance products designed for individuals, institutions and businesses. The motor, individual, professional and agricultural property damage policies offered by the Group are generally one-year contracts with tacit renewal, which includethird-partyliability coverage. The Group offers a full line of life insurance products: this offer is packaged for individuals in the form of individual policies and for businesses in theform of Group policies. The main individual insurance policies in euros offered to our customers are savings policies, term life policies, mixed insurance policies, deferred annuity policies with mandatory withdrawal in annuities, anddeferred capitalcontractswith return of premiums. The Group policies offered by the Group are essentially defined contribution pension plans and pension contracts by collective capitalisationin points withpoint value. The Group also sells multi-componentpolicieswith one investment component in euros and one or more components in units of account.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES