GROUPAMA / 2018 Registration document

7 FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE ANNUAL FINANCIAL STATEMENTS

Assessment of outstanding claims reserve (Please refer to Notes 3.1.5 and 11.1 to the annual financial statements) Identified risk Implemented procedures Reserves forclaims,appearingon thebalancesheetat 31 December 2018 for €4,360 million, represent one of thegreatest liabilities.

In order toassess the reasonableness of thestimation of the amountof reserves fornon-reported or late claims, our audit approach wasbasedon the information provided tous andincludedthe following work: Review thedesignandtest theeffectiveness of the key controls related ❯ to claimsmanagement and thedetermination of these provisions; Assesstherelevanceof thecalculationmethodused toestimatethe ❯ reserves; Reconcile the data used as a basis forestimating provisions with ❯ accounting; Assesstheappropriateness of the relative assumptions used forthe ❯ calculation of reserves; Conducta review of the outcomeof theprevious year’s accounting ❯ estimates; Use theCompany’sdatato independently assess these r serves in ❯ certain businessegmentsandassess theireasonableness.

They correspond to unpaid benefits, bothin principal and incidentals (management fees),andalsoincludean estimateof thebenefitspayable, unknownor late. The estimate of technicalprovisions isbased in particular on historical data projected tocalculate the costof claims not yet reported, using actuarial methods as described in Notes 3.1.5 and11.1. It requires theexerciseof management’s judgement in selecting the assumptions to be applied, the calculation methods tobe used, and the relatedmanagement cost estimates. Giventhe relative weight of thesereserves in the balancesheetandthe importance of the judgement exercised by management, we considered the valuation of these reservesasa keypointof theaudit.

Evaluation of the reserve for increasing risks (Long-term care) (Please refer to Notes 3.1.7 and 11.1 to the annual financial statements) Identified risk Implemented procedures

A reserve for increasing risks is established for insuranceoperationson risks of loss of autonomy to cover the temporary differences existing between the periodof application of the cover and its financingby insurance premiums. Thisprovision is madeprospectively, comparing the futurecommitments of the insurer and those of thepolicyholder. The regulations do not specify all the parameters to beused(in particular, biometric laws and discount rates) for thecalculation of this reserve. At 31 December 2018,thereserve for increasing risks was €272.5 million gross of reinsurance. We considered this topic as a key pointof theaudit dueto thesensitivityof the calculation of the reservefor increasing risks to thechoice of the following key assumptions thatrequire a significant degreeof judgement frommanagement: discount rate; ❯ biometric laws developed based on bservations and analysesbased on ❯ portfolio data.

We conducted a critical review of the procedures for implementing the methodology for determining thereservefor increasing risks and implemented, in particular, the following audit procedures: examine thedesignof theactuarial model to verify that it doesnot ❯ contain any anomalies thatcould distort the amount of the reserve calculated through, in particular, theassessment of the reserve calculation environment; prepare our own estimation independently; ❯ assess theconsistency of thekey assumptions used todetermine the ❯ reserve,whichincludes: theprinciples andmethodology of the discount rate andtheanalysis ■ of thesensitivityof thereserve for increasing risks in the context of low rates, therelevanceof themethodology for determining biometric lawsand ■ theiradequacy for theportfolio.

VERIFICATION OF THE MANAGEMENT REPORT AND OTHER DOCUMENTS PROVIDED TO MEMBERS

In accordancewith the professionalstandards applicable in France, we also performed the specific verificationsrequired by the applicable laws and regulations.

Information provided in the management report and other documents on the financial position and the annual financial statements We have no matters to report as to the fair presentation and the consistency with the annual financial statements of the information provided in the management report of the Board of Directors and in the other documents about the financial position and the annual financial statementssent to themembers,with the exceptionof the point below. The fair presentation and the consistencywith the annual financial statements of the information relating to payment terms mentioned in Article D. 441-4 of theFrench CommercialCode call for the following comment: As indicated in the management report, this information does not include insurance and reinsurance operations, as your Company considers that they do not fall within the scope of the information to be produced, in accordance with the circular of the Fédération Française de l’Assurance of 22 May2017.

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REGISTRATION DOCUMENT 2018 - GROUPAMA ASSURANCES MUTUELLES