GROUPAMA / 2018 Registration document

FINANCIAL STATEMENTS STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Assessment of outstanding claims reserve – Non-life insurance policies (Please refer to Notes 3.12.2 and 25 of the notes to the consolidated financial statements) Identified risk

Implemented procedures

In order toassess the reasonableness of thestimateof theamount of the outstanding claims reserve, we implemented thefollowingprocedures, using our actuaries: review thedesignandtesttheeffectiveness of thekeycontrolsrelated ❯ to claimsmanagement and thedetermination of these provisions; assess the relevanceof thecalculation methods used toestimatethe ❯ reserves; assess theappropriateness of the actuarial assumptions used to ❯ calculatereserves (depthof history taken into account, number of years of stabilisation); assess the reliability of the statementsproduced by our Company, ❯ tracingthe historicaldata,andreconcile them withthedata used to estimatethereserves with theaccounting records; analysethesettlementof thereserveof thepreviousfiscal yearwiththe ❯ actual expenses of claims (settlement surplus/deficit); in a number of segments, carry out an independent counter-valuation r ❯ a jointreviewof theassumptions used tocalculate the reserves and assess theireasonableness.

Reserves forclaims,appearingon thebalancesheetat 31 December 2018 for €8,596 million in theconsolidated accounts, represent o e of the greatest liabilities. They correspond to theestimate,net of claims receivable, of the costof all unpaid claims at thendof thefiscal year,bothdeclared and undeclared, bothin principaland incidentals (management fees). The estimate of technicalreserves is valuedon thebasis of anactuarial approach,using ultimate costvaluations based on paymentriangles or expenses (depending on therisksegments).Thisvaluation also incorporates thevaluationof delinquentclaims. It requirestheexerciseof management’s judgement in selecting the assumptions to be applied, the calculation methods tobe used, and the relatedmanagement cost estimates. Giventhe relative weight of theseprovisions in the balance sheet, the importance of the judgement exercised by management andthevarietyand complexity of the actuarialmethodsused, we considered the valuation of theseprovisionsas a key pointof theaudit.

Valuation of unlisted instruments (classification in level 3 in IFRS) (Please refer to Notes 3.2.1 and 7.10 to the consolidated financial statements) Identifiedrisk Implemented procedures

As part of its activity has n insurance group, Groupama holds financial instruments not listedon an active market classified asLevel 3 in the fair value hierarchyaccording to IFRS 13. These financial instruments represent €2,410 million on the assetssideof the Group’s consolidated balance sheet at 31 December 2018. These instruments are measuredat fairvalueon the basis of internal valuation models where theparameters are not observable or cannotbe corroborated by market data. The resulting valuations may be subject to additionalvalueadjustments to takeaccountof certainmarket,liquidity,or counterparty risks. The techniques used by management to valuetheseinstruments include a significantamount of judgement in the choice of methodologies, assumptions, andataused. Dueto thematerial nature of theoutstandingamountsandthesignificant share of assessment on the part of Management in determining themarket value, we believe that thevaluation of financial instrumentsclassified as Level 3 under IFRS 13 is a key pointof theaudit.

In order toassess the reasonableness of thestimation of the applied values of unlisted investments, our audit approach wasbased on information provided to us by your Company and includedthefollowing work: compare the appliedvaluewiththenetassetvalueof themanagement ❯ company, the latest transactions observed in themarket for the examined security, or acomparablewherepossible; reconcile the realisableamountswiththevaluationscommunicated by ❯ external platforms like Bloomberg or counterparties (banking institutions); where thesecurity was valued on the basis of an internal model: ❯ analysetherelevanceof theassumptions andparameters used, ■ review theconstruction of themodeland inputs(data) used for the ■ valuation, perform an independent counter-valuation by sampling, using our ■ ownmodels.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES