GROUPAMA / 2018 Registration document

FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

Operational structure of a decentralised organisation In a so-called decentralised organisation, the central body arises from the regional level; its role is to embody the collective will and steer the resulting policies, but from a legal standpoint, it does not have the power to impose those policies at regional level. Financing is one lever used to facilitate the implementationof the Group policies. Moreover, the programmes stemming from these policies usually generate high costs in the beginning with regard to the financial coverage of the regional mutual, with no immediate counterparty, and involve a business risk making the return on investment random. At the level of a regional mutual, implementing such programmes using its own resources seems contrary to its interests, at least inthe short term. Pooling the financingby GroupamaAssurancesMutuellesmakes it possible to remove this obstacle and to re-establish within the combination consisting of the regional mutuals the national dimension that would exist were this combination not legally divided intoregional mutuals. 3.1 As indicated above (see section 1.1), the reinsurance relationship between Groupama Assurances Mutuelles and the regional mutuals creates a powerful communityof interests amongst them. Groupama Assurances Mutuelles itself has a major interest not only in the economic and financial balance of the mutuals but also in their growth, in which it participates in proportion to the non-life insurance business transferred. Hence it is directly in the interests of Groupama Assurances Mutuelles to participate in some expenses incurredin expandingthe regional mutuals. 3.3 To qualify for financing by Groupama Assurances Mutuelles, a programme mustmeet several conditions: it must be part ofthe strategy definedby the Group; ❯ it must represent for most of the regional mutuals a financial ❯ expense that would disincentivise them from financing the programme alone; A rational, efficientsystem Interest of the centralreinsurer in expandingthebusiness lines of the regional mutuals 3.2

it must have the potential to be replicatedacross all the regional ❯ mutuals. The financing is discontinuedonce it ceases tobe necessary. This system has demonstrated its effectiveness in the past few years. Two major programmes have achieved significant results, namely the development and launch of a new offering in individual supplementary health insurance, funded by Groupama Assurances Mutuelles from 1999 to 2007, as well as the development and deployment within the regional mutuals of the SIGMAnon-life insurance management system. The programme supporting the deployment of the retail banking business in the regional mutuals has been in progress since 2004. This business requires a major effort on the part of the regional mutuals, especially in terms of sales force training and management. The subsidies related to achieving sales objectives are designed to end when the retail banking business reaches its financial breakeven point. For fiscal year 2018, it was considered that although the banking business is now carried out by a Groupama Assurances Mutuelles holding and no longer a subsidiary, it was necessary to maintain a subsidy mechanism between Groupama Assurances Mutuelles and the regional mutuals, aimed at supporting the revival and development of this business and offsetting the distribution costs of the mutuals, as long as the portfolio of banking products was not sufficiently developed to self-fund through commissions.For fiscal year 2018, the amount of financial support devoted to deploying the banking business thus cameto a total of €2.1 million,net of corporate tax. Lastly, for the first time in 2015, Groupama AssurancesMutuelles covered the costs resulting from the issue of mutual certificatesfor the regional mutuals. In 2018, Groupama Assurances Mutuelles paid a subsidy of €15.8 million net of corporate tax for mutual certificates issuedin 2018by 10 regionalmutuals. Funding of major national programmesis now subject to review by the Audit and Risk Management Committee before being authorised by the Groupama Assurances Mutuelles Board of Directors.

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EMPLOYEES OF CONSOLIDATED COMPANIES NOTE 45

This note is presented in §1.5.2 ofthis registrationdocument.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES