GROUPAMA / 2018 Registration document

FINANCIAL STATEMENTS ANNUAL FINANCIAL STATEMENTS AND NOTES

Real estate investments, variable-income (b) or fixed-income securities falling under Article R. 343-10 of the French Insurance Code, loans REAL-ESTATEINVESTMENTS When the net carrying amount of buildings, equity shares, or shares in unlisted property or real estate companies exceeds the realisable value of these investments, a reserve for long-term impairment may be allocated. This impairment is applied on investment properties after a materiality threshold has been taken into account. It is alsoapplied to operatingpropertiesprovided that their value in use is more than 15% lessthan the net book value. LISTEDSECURITIES(EXCEPTEQUITYINTERESTS) For those investments covered by Article R. 343-10 of the French Insurance Code, a line-by-line reserve for impairment may only be allocated when there is reason to deem that the impairment is long-term. In accordance with Article 123-7 of ANC Regulation 2015-11, long-term impairmentsof amortisable securities covered by Article R. 343-10 of the French Insurance Code that the Company can and intends to hold until maturity are analysed in terms of credit risk only. A reserve for long-term impairment is established in the event of a proven credit risk, when there is reason to believe that the counterpartywill not be able to honour his commitments,either to pay interestor to repay theprincipal. For amortisable securities covered by Article R. 343-10 of the French Insurance Code that the Company does not have the intention or ability to hold until maturity, long-term impairmentsare established by analysingall of the risks identifiedon this investment based on theconsidered holding horizon. The long-term impairment of an investment line can be presumed in the following cases: there was a long-term reserve on this investment line in the ❯ previous publishedstatement; the listed investment has consistently shown a significant ❯ unrecognised loss from its book value over a period of six consecutive monthsprior to closing; there are objectiveindicators of long-term impairment. ❯ The recoverable amount is determined based on a multi-criteria approach that dependson the nature of the assets and the holding strategy. In the event of long-term impairment of a security covered by Article R. 343-10of the French InsuranceCode, the amount of the impairment is the difference between historical cost price and recoverableamount.

EQUITYSECURITIES The valuationof equity securitiesis based onmulti-criteriamethods chosen according to each particular situation (nature of assets, holding horizon, etc.). The net book value of the equity securities of Groupama Holding Filiales et Participations (GHFP) amounts to €6,293 million. The valuation method applied to these securities is based on the intrinsic valuationof the securitiesof subsidiariesand participations that make up GHFP’sassets. Each entity that undergoes a valuation provides its underwriting income forecasts calculated based on an estimated increase in premium income and a change in combined ratio for the plan period. These assumptions are adapted on the basis of the objectivesof each entity, past experience,and external constraints imposed by the local market (competition, regulation, market shares, etc.). Forecasts of financial income and discounted free cash flow are determined on the basis of financial assumptions (notably discount rate and rate of return). As a general rule, the applied available future cash flows correspond: during an explicit period corresponding to the first years, the ❯ cash flow column is based in particularon the first three yearsof the Group’s operational strategy planning. This is subject to a discussion process between local management and the Group; beyond the explicit horizon, the cash flow column is completed ❯ by a terminal value. This terminal value is based on long-term growth assumptions applied to an updated projection of normativecash flows; the solvencymargin integrated into the business plans is valued ❯ according to the prudential rules established by the Solvency II Directive for subsidiaries whose country is subject to this regulation. For the other entities, the solvency margin is assessed accordingto the applicablelocal regulations. A reserve for impairment is established when the value in use at the inventory date obtained through the valuation methods described above isless than the entry costof those securities. LOANS When the estimate of the recoverable value of a loan at inventory date is below its gross amount plus any accrued and unpaid interest at the end of the period, a reserve for impairment is allocated for the difference. Investment income and expenses 3.2.3 Financial income includes the revenue from investments received during the fiscal year (rent, dividends, coupon payments, interest on loans andcurrent accounts). Other investment income includes the pro-rata share in the discount on the bond redemption differences and reversals of reserves for lossin value of investments. Other investmentexpenses include the percentageof appreciation on the differences in redemption of bonds, and the depreciation allowance and reserves for investments, and the percentage of general expenses corresponding to investment-management activities.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES