GROUPAMA / 2018 Registration document

RISK FACTORS AND RISK MANAGEMENT RISK MANAGEMENT AND SENSITIVITY ANALYSES

the commercial risk brought about by the reserving risk insofar ❯ as policyholder compensation could be impacted by the aforementioned reserving. The weight of equity instruments out of total financial investments (including operating property) was 4.6% in market value, not including option exposures. Most equity instruments are classified in “available-for-saleassets”. Equityinstrumentsinclude: equities in French and foreign companies listed for trading on ❯ regulated markets.The exposure can also be done in index form and possibly in the form of structured products whose performanceis partially indexed to an equity index. They may be held directly orwithin mutual funds (FCP andSICAV); equities in French and foreign companies that are not listed. ❯ They may be held directly or in the form of a venture capital fund (“FCPR”). Group risk management (b) The Group tactically manages its hedges and exposure according to market levels with variations in its low exposure over 2018. The Group also pursued its diversificationpolicy through commitments in unlistedequities. The Group manages equities as part of internal constraints accordingto two distinct processes:

a primary limit fixing the maximum permissible exposure to ❯ equity risk; a set of secondary limits with the objective of limiting the equity ❯ portfolio’s concentrationby sector, issuer, or major type as well as illiquid equity categories. These limits are observed at the level of each insurance entity and at the Group level. Any exceeding of the limits is handled according to whether it is part of an entity or the Group by the corresponding RiskCommittees. The following table shows the impacts on income and the revaluation reserve (classified under shareholders’ equity) of a sensitivity analysis carried out in the event of an up or down change of10% in stockmarket prices and indices. The impacts are shown after taking the following factors into consideration: the rate ofprofit sharing ofthe entityholding the securities; ❯ the current taxrate. ❯ In fiscal year 2018, the profit-sharingrate used for entities holding life insurancecommitmentscorrespondedto a range of 65.36% to 88.03%. Sensitivity offinancial investments to equity (c) risk analysis

5

31.12.2018

31.12.2017

Equities risk

Equities risk

+10%

-10%

+10%

-10%

(in millions of euros)

Impact on the revaluation reserve

59 34

(59)

57 32

(57)

Equities

(34)

(32)

Equitymutual funds

25

(25)

25

(25)

Bonds Fixed-income mutual funds Derivative instruments andembedded derivatives Impact on net income

10

(10)

19

(19)

Equities Equitymutual funds

10

(10)

19

(19)

Bonds Fixed-income mutual funds Derivative instruments andembedded derivatives

Foreign exchange risk 5.2.3.3 Exposure toforeign exchange risk (a)

against the dollar, the Hungarian forint, the Romanian leu, the Bulgarian lev, thepound sterling, andthe Turkish lira. Investments made by Groupama, within the context of its internationalsubsidiaries,exposes it to the net accountingposition of entities with a different functional currency from the euro. To date, this includes the pound sterling, the Turkish lira, the Hungarian forint, the Romanian leu, the Bulgarian lev, the yuan, and the Tunisian dinar. These impacts are posted in group's equity, underforeign exchangeadjustment.

Exposure to foreign exchange risk for subsidiaries in the eurozone corresponds primarily to their assets, subject to exchange rate fluctuations of mutual funds or securities denominated in foreign currencies and mutual funds denominated in euros applying to foreign-currencysecurities. In practice, the portfolios are exposed primarily to foreign exchange risks correspondingto the euro rate

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES