GROUPAMA / 2018 Registration document

RISK FACTORS AND RISK MANAGEMENT RISK MANAGEMENT AND SENSITIVITY ANALYSES

Specific features ofcertainnon-life insurance (b) policies As with other insurers, the income and financial position of Groupamamay be affected quite significantlyby the unanticipated and random occurrence of natural or man-made events, such as floods, drought, landslides, storms, earthquakes, riots, fire, explosions, or acts of terrorism. For example, the storm suffered by France in December 1999 resulted in major damage and a significant increase in compensation claims by Groupama customers. Climate changes that have occurred in recent years, specifically global warming, have contributed to increasing the unpredictable nature and frequency of climate events and natural events in regions where Groupama is active, particularly in Europe, and have created new uncertainty as to Groupama’s future risk trends andexposure. Groupama is implementing a reinsurance programme to limit the losses it is likely to suffer as a result of events or other events affecting its underwriting results. The reinsurance programmes implemented by Groupama transfer a portion of the losses and correspondingexpenses to the reinsurers. These programmesare supplementedby the issuance of a “cat bond” on the high tranche of the force-of-nature protections. However, as an issuer of policies covered by reinsurance policies, Groupama remains committed to all its reinsured risks. Reinsurance policies therefore do not relieve Groupama of the obligation to settle claims. The Group remains subject to risks related to the credit situation of reinsurers and its ability to obtain the payments due from them. Moreover, the reinsurance offering, the amounts that may be covered,and the cost of coveragedepend upon market conditions and are likelyto vary significantly. Other factors in riskgrowth may be mentioned: ageing ofthe population (health, long-term care); ❯ increased pollution; ❯ strengthened legal structure (liability – compensation for bodily ❯ injury, etc.).

Specific features ofcertainlife insurance (c) policiesand financialcontracts Discretionary profit-sharing clause Certain life insurance,savings and pension products offered by the Group contain a discretionary profit-sharing clause. This profit sharing must at least correspond to the regulatory and/or contractualconstraints.Commercialconsiderationsmay lead to an increase in this profit-sharing.This increase,the amountof which is left to the insurer’sdiscretion,allows policy holders to participate in financial management results and the underwriting results of the insurance company. Early redemption option Most of the savings and retirement products may be surrendered by the policyholders at a value defined by the policy before maturity. Large redemptions may have significant impact on the results orthe solvencyin certainunfavourable environments. Specific features of unit-linked policies Most unit-linked policies sold by Groupama do not generally provide for contractual performance. Under these conditions, the policyholder alone directly assumes responsibility for the investment risk. Certain policies may provide for a minimum redemption guarantee incase of the death of thepolicyholder. Mortalityand longevity risks (d) In life insurance, the payment of benefits depends on the death or the survival of the policyholder.It is the occurrenceof one or other of these events that gives the right to payment of a benefit. The probability that these events will occur is estimated through experiential or regulatory statistical tables. In most cases, reserves are calculated using the regulatory tables based on statistics of population change. These tables are regularly revised to take demographic changes into account. The income or equity is potentially exposed to risk if demographic change deviates from experiencewith regard to these reserving tables.

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The amountof actuarial reserves forannuities is asfollows:

31.12.2018

31.12.2017

France

International

Total

Total

(in millions of euros)

Actuarialreserves for lifeannuities

10,108

13

10,121

10,031

Actuarialreserves for non-lifeannuities

2,303

21

2,324

2,343

TOTAL

12,411

34

12,445

12,374

The share ofactuarial reserves for life annuities continued to belargely predominant atthe endof 2018 (> 80% of annuity commitments).

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES