GROUPAMA / 2018 Registration document

6 EARNINGS AND FINANCIAL POSITION MANAGEMENT REPORT OF THE BOARD OF DIRECTORS

Net incomefrom international insurance amounted to €22 million at 31 December 2018comparedwith €91 million at 31 December2017. The breakdown ofnet income,by entity, is asfollows:

Net income (in millions of euros) (1)

31.12.2017

31.12.2018

Italy

35

(43)

Greece

11

10

Turkey

8

16

Hungary

15

23

Romania

10

2

Bulgaria

1

1

Gan Outre-Mer

2

9

Equity-method entities

7 1

5 1

Tunisia (Star)

China (Groupama AVIC)

6

4

Ceded entities

3 4

Great Britain

Portugal

(2)

TOTAL

91

22

Excluding income from the holding business. (1)

Italy (a) Premium income for the Italian subsidiary Groupama Assicurazioni fell -1.7% to €1.481 billion at 31 December 2018. However, the changes were contrasted according to the segments. Property and casualty insurance premium income increased +2.8% to €1.041 billion.The developmentof the portfolio explains the growth in the passengervehicle business (+3.8% for a portfolio representing 70% of written premiums in property and casualty insurance) andhome insurance(+4.6%). Life and health insurance activity (€440 million) decreased by -10.8% compared with the previous period. Individual savings/pensionbusiness decreased -18.2%. Individual savings in euros declined by -23.7%under the combinedeffect of the end of an agreementwith a major partner and the subsidiary’sstrategy to limit inflows in euros in accordance with the Group’s guidelines. Individual UL savings fell by -9.7% due to the cessation of production of the banking network. However, the good performance by the group retirement (+47.7%) and group health (+68.3%) segmentsmitigatedthese changes. Economic operating income amounted to -€26 million at 31 December 2018 compared with a profit of +€37 million at 31 December 2017. The combined ratio in property and casualty insurance amounted to 106.4% at 31 December 2018, up +6.7 points compared with 31 December 2017. The gross loss ratio deteriorated by +9.7 points to 76.6% as of 31 December 2018 due to the reinforcementof reserves on prior periods in motor insurance and

an increase in the attritional loss experiencedue to the increase in average cost and certain leasing partnershipsthat were terminated at the end of 2018. The operating cost rate increased by +0.6 points to 30.5%. In life and health insurance, the technical result decreased mainly due to the unfavourable change in the loss experience in group protection andin health. The recurring financial margin (net of profit sharing) was down under the effect ofthe decreasein yield rates. Net income totalled -€43 million at 31 December 2018 compared with +€35 million at 31 December 2017. This result includes the amortisationof portfolio securities for an amount (-€11 millionafter taxes) and the non-recurring financial margin. This margin was down due to the lower volume of capital gains on disposalsand an adverse effect related to the change in fair value of financial instruments. Turkey (b) Premium income for the Turkish subsidiaries Groupama Sigorta and GroupamaEmeklilik increased by +8.6% to €265 millionas of 31 December 2018. Property and casualty insurance premium income (€206 million) increased by +9.1%. Passenger vehicle insurance increased by +13.0% mainly thanks to the pool. Agricultural risks (including Tarsim) increased +4.5%, mainly thanks to the TKK network of agricultural cooperatives,which again paid off in 2018 but will end in 2019.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES