GROUPAMA / 2018 Registration document

FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS AND NOTES

Outward reinsuranceand retrocessions 3.1.9 Outward reinsurance, mainly to reinsurers outside the Group, on accepted risks or direct insurance is accounted for under the terms of the various treaties. They may be supplemented by estimates if the current accounts with those reinsurers are incomplete at the end of the financial year.The securities taken as collateral by the reinsurers(outward reinsurersor retrocessionaires) are recorded inthe statement ofcommitments receivedand given. Pursuant to the reinsurance agreement, Groupama Assurances Mutuelles makes retrocessions with regional mutuals on various risks acceptedor direct insurance;those transactionsare recorded pursuant to the reinsuranceagreementsigned betweenGroupama AssurancesMutuellesand the regional mutuals. Entry costs andvaluation atyear-end 3.2.1 Land and buildings, shares in real-estate (a) investment companies (SCIs) Buildings and shares in unlisted SCIs are recorded at their purchaseor cost price. In accordance with Article 213-8 of the ANC Regulation 2014-03 on the French national accounting system, acquisition expenses (transfer taxes, professional fees and registration costs, etc.) are incorporatedinto the acquisitioncost of the shell componentof the asset to which they refer. Pursuant to Article 214-9 of ANC Regulation 2014-03 on the French national accountingsystem, real propertiesare recordedby component. The four components used by Groupama Assurances Mutuelles are the following: bare structureor shell; ❯ wind- andwater-tightfacilities; ❯ The lifespan and rate of amortisation of each component depend on the period of foreseeableuse of the componentand the nature of the real-estate property. Because the residual value of the bare structure component cannot be measured in a sufficiently reliable fashion, it is therefore not determined, and that component is amortised based on theacquisitioncost. technical facilities; ❯ fixtures, finishings. ❯ Investments 3.2

The actuarial reserves for annuities, as determined by the regional mutuals and accepted by Groupama Assurances Mutuelles, represent the actual value of their commitments relating to annuities plus their ancillary expenses. The tables applied to assess these reserves are computedwith a financial discount and are based ondemographic trends. In life and health insurance, the actuarial reserves for temporary and permanent disability annuities are determined according to Article 143-2of ANC Regulation 2018-08. The discount rate used is 60% of the average TME of the last 24 months plus 10 basis points. Actuarial reserves for payments made for traffic accidents occurringon or after 1 January2013 include an annual adjustment with an inflation rate of 2%. For disability annuities in progress, the reserves are determined by applying the maintenance and disability tables in ARTICLEs 600-2 and 600-4 of the annex to ANC Regulation2018-08. Regarding actuarial reserves for non-life annuity income, the business also incorporates the population’s lengthening life expectancy.Consequently,actuarial reserves for additionalnon-life annuity income are posted at the balance-sheet close in order to calculate the principal to be paid to victims of bodily injury. These are now based onthe TH/TF 2000-2002mortality tables. Pursuant to Article R. 343-5 of the French Insurance Code, a reserve for liquidity risk is allocated when investments subject to Article R. 343-10, with the exception of amortisable securities that the Company is able and intends to hold until maturity, are found to be in a situation of overall net unrealised capital loss. This reserve is intended to deal with insufficient liquidity of investments, especially when there is a change in the pace at which claims are paid. Subject to compliance with the provisions of the French Insurance Code, which allow for an extended schedule for establishing this reserve, contributions to this reserve are spread out over three years. 3.1.8 Inward reinsurance transactions are recognised according to the terms of the Groupama Assurances Mutuelles reinsurance agreement with its regional mutuals, reinsurance treaties entered into mainly with the Group’s other entities and under the professional pools. Inward reinsurancetransactions

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES