GROUPAMA / 2019 Universal Registration Document

5 GROUP RISK FACTORS The Group’s main risks

Climate risk on crops 5.1.2.1 As one of the leading agricultural risk insurers on the French market, the Group is exposed to the risk of occurrence of major cumulative climate events affecting the insured crops (mainly hailstorms,floods,or droughts). The Group, whose main expertise is agricultural insurance, insures all types of crops throughout France through its regional mutuals and also offers its expertise internationally (Turkey, Romania, and China). As of 31 December2019, the areas covered by multi-risk climate insurance in France were divided among the following crops: large crops (wheat,maize, rapeseed, etc.):93.4%; ● If this risk were to materialise, a technical loss may have a direct impact on the Group’s net income. However, it is mitigatedby risk management measures and the effectiveness of reinsurance covers. The adopted external reinsurance scheme is based on stop-loss retention cover, supplemented by a quota share agreement. The climatic risk on crops isconsidered “moderate”. Storm risk 5.1.2.2 The Group is exposed to the risk of storms causing direct or indirect damage to insured property over a very short period. If this risk were to materialise, it may have a moderate impact on the Group’s net income. The Group’s reinsuranceprogrammeenables it to reduce its exposure to this natural risk. For example, in 2017, the exceptional climate-relatedclaim associated with storms Irma and Maria in the Caribbean had a limited impact on the Group’s income: while the gross impact of these events totalled €330 million,the actual impact on the Group after reinsurancewas €38 million in the financial statements at the end of December 2017. The storm risk isconsidered“moderate”. Risk of insufficient reserves 5.1.2.3 The Group is exposed to the risk of insufficientoutstandingclaims reserves and other technical reserves related to the non-life insurance and non-life health insurance business. The materialisation and magnitude of the risk may be influenced by internal and external factors. viticulture: 4.0%; ● vegetables: 1.8%; ● grassland: 0.8%; ● arboriculture: 0.1%. ●

The potential increase in compensationand claims, the emergence of new kinds of liability, growing uncertainty as to the volume and level of maximum losses may, for example, have a material impact on Groupama’s business activities, consolidated net income and liquidity. The new coronavirus (SARS-COV2) epidemic, responsible for respiratory infectious disease Covid-19, which began in January 2020, was declared a pandemic by the WHO on 11 March 2020. Covid-19has also been present in France since January 2020 and is likely to impactthe Group’sactivitiesand results from the first half of 2020. According to preliminary estimates, in Life and Health insurance,the health costs (consultations,hospitalizations)and the work stoppages present the most important impacts, followed by the excess mortality. In Property and Casualty insurance, , the effects could be compensated between on the one hand a significant loss on event insurance, cancellation, credit guarantee, liability and, on the other hand, the slightest claims caused by lockdown, particularly on motor insurance). To this should also be added the impacts caused by the deteriorationof the economicenvironment(loss of premiumincome and therefore of margins). Finally, beyond these impacts, the insurancesector will most likely be called upon to participatein the national solidarityeffort (participationin reimbursementof screening costs, greater compensation for lockdown medical staff, etc.). In the short term, in order to best manage the consequencesof this unprecedented global epidemic, the Group, as insurer and economic player, closely monitors the potential risks involved through its monitoring indicators, its governance bodies and BusinessContinuityPlans. Through the diversificationof its portfolio,the individualselectionof risks accepted, the limitation of its exposure to risks (specifically in respect of natural disasters), the managementof overlappingrisks and reliance on reinsurance, Groupama significantly reduces the negative impactsof its exposure. Insurancerisks are managed in accordancewith the principlesand rules relating to underwriting and reserves. In particular, these principlesand rules specify the cover limits and the exclusionsfixed under reinsurance agreements, the monitoring of the appropriateness of the portfolio and the price level, preventive measures such as in the case of adverse climatic risks, the provision of information to insured municipalities and, where appropriate, to policyholders in order to anticipate and address such risks, the rules for managing claims, and the standards on reserves. Despite the careful attention paid to the monitoring of these risks and the risk control systemsput into place, Groupama,becauseof its historical customer base and inflation of catastrophic events related to global warming, might experience major losses in the future on such risks, which would have a substantial negative impact on itsfinancial positionand net income. The Group’s main insurance risks are presented below in descending order.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES

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