GROUPAMA / 2019 Universal Registration Document

6 EARNINGS AND FINANCIAL POSITION Management report of the Board of Directors

Economic operatingincome (in millions ofeuros)

31.12.2018

31.12.2019 Change in value

Change%

Propertyand casualty insurance –France

59

223

164

>100%

Life and health insurance –France

252

339

87

34.5%

Total Insurance –France

310

561

251

81.0%

Propertyand casualty insurance –International

13

(110)

(123)

<-100%

Life and health insurance –International

30

14

(16)

-53.3%

Total Insurance –International

43

(96)

(139)

<-100%

Bankingand financialbusinesses

34

38

4

11.8%

Holding companyactivities

(89)

(90)

(1)

-1.2%

Total –Groupama

298

413

115

38.6%

Propertyand casualty insurance

72

113

41

56.9%

Life and health insurance

282

353

71

25.2%

The Group’s economic operating income totalled €413 million at 31 December 2019 compared with €298 million at 31 December 2018. Economic operating income from insurance was +€466 million in 2019, up +€112 million from2018. The financial statementsare prepared against a financial backdrop still marked by a low-interest rate environment. In this context, which creates an increasingly strong distortion between the economic cost of insurance liabilities and the real return on the assets representingthese liabilitiesand, consequently,extra caution in the valuation of liabilities, the Group decided, in its combined financial statements, to extend the application of a cautiously estimated rate of return on assets for the discounting of all its non-life annuity preserves (deferred or in service) starting on 1 January 2019. This measuremakes it possible to strengthenthe funding of reserves for the business internationally and in the weather insurancesegmentsside byside. Economic operating income from life and health insurance totalled +€353 millionin 2019 versus +€282 millionin 2018 (+€87 millionin France and -€16 millioninternationally).In France,this increasewas mainly due to the improved underwriting margin with a net combined ratio of the health and personal injury insurance businessesimproving by-3.1 pointsto 93.1%. In property and casualty insurance, economic operating income amounted to +€113 million compared with +€72 million at 31 December 2018 (+€164 million in France and -€123 million internationally). The net combined ratio in non-life insurance was thus 97.0% in 2019 versus 99.3% in 2018 (-2.3 points). This difference is related to a change in the estimation in the IFRS financial statements corresponding to the expansion of the discount of non-life annuity reserves on the basis of a prudently

estimated rate of return on assets. In addition, the other main changes were: the attritional loss experience of 59.9% (-0.9 points) with an ● improvement in France (-1.2 points to 60.3%) and a decline in internationalsubsidiaries (+0.4 points to 57.8%); a decrease in the cost of serious claims (-0.6 points):-0.5 points ● in France and-0.1 pointsinternationally; an increase in the cost of weather claims (+1.1 points) both in ● France, with a 2019 affected by crops, storms, and natural disasters, andinternationally. Banking and financial businesses contributed +€38 million to the Group’s economic income in 2019. The Group’s holding activity posted economic operating income of -€90 million in 2019, compared with a loss of -€89 million in 2018. The Group’s net income totalled +€345 million at 31 December 2019 compared with +€450 million at 31 December 2018. The non-recurringfinancialmargindecreasedby -€27 million.It includes capital gains of €354 million from the sale of a property in Paris, while 2018 was marked by the sale of a property in La Défense, ultimately resulting in an equivalentlevel of capital gains. The 2019 income also includes: other non-recurring expenses related to various operations ● amountingto -€36 millionas well as the equity-methodresult of Orange Bank for-€63 million ( versus -€59 million in 2018); impairmentof goodwillof the Italian subsidiary(-€102 million)and ● Orange Bank (-€81 million); the result of discontinued businesses of -€4 million ● corresponding toLa BanquePostale’sresult.

113 Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES