GROUPAMA / 2018 Registration document

FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

the reinsurance conditions laid down by the agreement are ❯ developed by consultative bodies whose members are from Groupama Assurances Mutuelles and all the mutuals. These conditions apply toall the regional mutuals; shared future among the mutuals and their internal reinsurer: all ❯ risks without exception are subject to outward reinsurance particularly as quota share outward reinsurance, which enables Groupama Assurances Mutuelles to participate in the business growth of the mutuals, including in those divisions where reinsurance is not technically indispensable (health insurance, for example); in consideration, Groupama Assurances Mutuelles automatically provides the mutuals with reinsurance when they embark on new, less well-known ventures (multi-risk crop insurance, long-term care insurance, etc.) by calculating the insurance terms andconditions regardless; retrocession to the regional mutuals by Groupama Assurances ❯ Mutuelles of a portion of the general profit/loss from its inward reinsurance business, which reduces the need for reinsurance outside the Group and involves all the mutuals in balancing the outward reinsurance business with Groupama Assurances Mutuelles. Any amendment to the structural parameters of the reinsurance agreement and its schedules (rate of quota share, commission rates and loading rate by risk family, thresholds and floors for excess claims beyond their annual monetary indexation and additional retentions, predefined algorithms used in the calculation of the pricing of non-proportional protections, modulation of the premium bases for storm protections according to the risk exposure of each mutual) must be made in the form of a written rider and approved by the Groupama Assurances Mutuelles regional mutuals via the followingprocedure: proposed amendments are drafted by a reinsurance working ❯ group made up of representatives of Groupama Assurances Mutuelles andthe regional mutuals; subject to the approval of the Chief Executive Officer of ❯ Groupama Assurances Mutuelles, they are submitted for the agreement of the Chief Executive Officers of the regional mutuals; lastly, they are presented by the Groupama Assurances ❯ Mutuelles Chief Executive Officer to the meeting of the Groupama Assurances Mutuelles Board of Directors,which is as asked to approve the proposed amendments by a simple majority vote, after seeking the recommendationsof the Audit and Risk Management Committee. The amendments made to the reinsurance agreement over the past twodecades wereprompted by one oftwo factors: changes in the structure of the mutuals (successive ❯ combinations,opening up the membershipand takeover of the non-agriculturalrisk portfolio previouslymanaged by the Samda subsidiary) that changed their size and therefore their holding capacity; certain risk categories (major weather-relatedevents, imbalance ❯ in industrial risks, etc.) required greater empowerment of the mutuals in terms of underwritingcontrol and the costs of claims by increasingtheir holdings in those areas.

In particular, after examination and approval of the project by the Group Executive Committee, the proposal by the Executive Management of Groupama Assurances Mutuelles to modify the General Reinsurance Regulations of the regional mutuals with effect from 1 January 2014, so that it supports the major objective of recovery of the Group’s operational profitability, was accepted by the Groupama Assurances Mutuelles Board of Directors on 12 December 2013. The amendmentnot only seeks to clarify the economic challenges facing Internal Reinsuranceand to bring its structures into line with market practice, with the aim of facilitating their uptake by operationalManagers, but also, and primarily, to increase the level of involvement of the regional mutuals in the quality of their technical results. Since then, the agreement resulting from this reform has been the subject of several adjustments aimed at making certain mechanisms more adapted to the volutionof certainsegments. As indicated previously, the reinsurance agreement encompasses all the risks underwrittenby the regional mutuals. It is designed to take into account both the overall balance between them and their specific characteristicsin terms of cover needs. To that end, all the risks are subject to classification, which makes it possible to differentiate amongst the reinsurance solutions offered while ensuring inter-companyconsistency. Classification of reinsured risks (b) Risks are classified into two groups of reinsurance segments, depending on the nature of their need for protection, which is based on their degree of volatility. Classification of risks is carried out in two groups of reinsurance segments: SEGMENTSOF GROUP 1 The first group consistsof the following segments: automobile/PersonalLiability – Miscellaneous Liability; ❯ professionalsthird-partyliability; ❯ fire; ❯ storm; ❯ life and health insuranceexcludinghealth; ❯ health. ❯ Given their characteristics, the segments of the first group are subject to relatively similar reinsurance arrangements and to the allocation to each regional mutual fund of share in the profits calculated on all results ceded by it as a quota share for these segments. OTHERSEGMENTS These are risks that, given their significant specificities,are subject to highlydifferentiated reinsurance,mainly: crops; ❯ natural disasters; ❯ construction; ❯ long-term care; ❯ forests; ❯ attacks (inthe sense ofthe Gareat pool). ❯

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES