GROUPAMA / 2018 Registration document

FINANCIAL STATEMENTS STATUTORY AUDITORS’ REPORT ON THE ANNUAL FINANCIAL STATEMENTS

Conversion of the Groupama central body (please refer to Notes 1.2 and 9 to the annual financial statements) Identified risk Implemented procedures

At theGeneralMeetingof 7 June2018,andfollowingthepromulgation of Article 52 of law 2016-1691 of 9 December 2016, Groupama SA finalised its conversion of the Group’s central body into a NationalAgricultural Reinsurance Mutual, whichis a special form of mutual insurance company (SAM). Thisoperation was precededby two mergers withGroupama SA involving Groupama Holding 2 and then Groupama Holding, which led the regional mutuals to holdsharesin Groupama SA directly. Pursuantto the lawandafter thevoteat theGeneral Meeting of Groupama SA, the regional mutualsubsequently became members of Caisse Nationale de Réassurance MutuelleAgricoleGroupama, with their Groupama SA shares being simultaneously converted into mutual certificates issued by Caisse Nationale de Réassurance Mutuelle Agricole Groupama. The valueof themutual certificates issued as part of theconversion constitutes the initial capital of Caisse Nationalede Réassurance Mutuelle Agricole Groupama of €3,618 million a dconsists of 411,824,587 mutual certificates with a par valueof €8,785, wholly owned by the13 member mutuals. Thisconversion resulted in the recording in the shareholders’ equityof Caisse Nationale de Réassurance MutuelleAgricoleGroupama of an initial conversion difference of €393.04 million, corresponding to thedifference betweenthebook equityof themergedentity Groupama SA/Groupama Holding/Groupama Holding 2 andits valuation at the time of theconversion. Dueto thestrategic nature andthesignificant impacts on group’s equity of theconversion of the Groupama central body on 7 June2018,we considered this operation to be a key point of theaudit.

To ensure the correctaccountingandtaxtreatmentof themergersand acquisitionsof GroupamaHolding 2 andGroupamaHoldingby Groupama SA as well as its conversion into a mutualinsurance company, our work included: ensure the approvalof mergersandacquisitionsof Groupama ❯ Holding 2 andGroupama Holding and theconversionby theGroupama bodies as well as thefulfilmentof theconditions precedent; ensure that themethod of valuing contributions i accordance with the ❯ accounting regulations and thereality, completeness, and accuracy of thevalueattributed to thecontributions have been reviewed and certified by two merger auditors; ensure thathe valuation method used todetermine the remuneration of ❯ contributions as wellasthe fairness of the xchange ratios havebeen reviewed and certified by two merger auditors; ensure thecorrect accounting and tax treatment (with theinvolvement ❯ of our tax experts) of the two merger takeovers; assess thevaluation method used for theconversion of Groupama SA ❯ sharesinto mutual certificates and ensure thecorrectvaluationof the initial capital and theconversion difference afterthe conversion; ensure thecorrect accounting and tax treatment (with theinvolvement ❯ of our tax experts) of the conversion.

Valuation of equity securities (Please refer to Notes 3.2.2 and 5.2 to the annual financial statements) Identified risk

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Implemented procedures

Equitysecurities, shown on thebalance sheet at 31 December 2018for €9,136 million, representone of the largestassets. They are initially recognised at theirhistorical cost of acquisition, including costs, minus a provisionfor long-term impairment where appropriate. The valuation of equity securities is based on multi-criteria methods chosen according to each particular situation ( ature of assets, holding horizon, etc.). The techniques used by management to valuethesesecurities thusinclude a significantamountof judgement in the choice of methodologies, assumptions, andataused. Dueto themateriality of thequitysecuritiesandthesensitivity to management’s choice of methodologies and calculation parameters, we considered the proper valuation of equity securities as a key audit point.

In order toassess the reasonableness of thestimation of the valuation of theequity securities held by Caisse Nationale deRéassuranceMutuelle Agricole Groupama (and especially theGroupama Holding Filiales et Participations (GHFP) equity securities), our workparticularly consisted in analysing the assumptions andmethodsunderlying the valuation of the subsidiaries, in particular: compare thegrowth rates to infinity with theaveragegrowth rates ❯ observed in the countries in which Groupama operates forsimilar activities; assess the reasonableness andcoherenceof thebusinessplans based ❯ on historical evidence, our knowledge of the entities,themarket in which they are positioned, andmacroeconomic factorsthatmayaffect theseforecasts; assess thediscountratescomparedwiththecustomary rates used by ❯ themarket’sfinancialanalysts based on a sample of listed European insurers consideredcomparablewiththeCompany in terms of activity, size, andgeographical area; assess themethod of calculating S2Costof Capitalusedfor the ❯ valuation of equity securities with the involvement of ourteamsof actuaries and analysethemethodologies for valuing equity securities.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES