GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Valuation rules (e) The valuation rules and any impairment must be understood as dependingon the classificationof the financial instrument in one of the four categories givenabove. Assets held for trading and those for which the option to include them in this category has been applied are recorded in the income statement at the closing fair value. Financial assets held to maturity, unlisted equities for which the fair value cannot be valued reliably, and loans and receivables are recorded at amortised cost or historic cost. The amortised cost is the amount at which the asset was valued at the time of initial recognition, minus repayments of principal, plus or minus the cumulative amortisation of the differences between the initial amount and the amount at maturity (based on the effective interest rate) and corrected forany reservesfor impairment. The differences between the redemption value and the acquisition price are distributed actuarially as expenses (agio) or as income (discount) over the residual life of the securities. When several redemption dates are provided, the residual life is determined on the basisof the final redemptiondate. Available-for-sale assets are valued at their fair value, and unrealisedcapital gains or losses are recorded in a separate line of group’s equity. Investmentsrepresentingunit-linkedpolicies are valued at fair value through income, as anoption. Reserves for impairment (f) At each closing date, the Group looks for the existenceof objective presumptionsof impairment in itsinvestments. For debt instruments classified as available-for-saleassets, a loss of value is recognised through income in the event of a proven counterparty risk. Impairments recognised on debt instruments are written back through income in the event of reduction or disappearanceof the counterparty risk. For equity instruments classified as available-for-sale assets, the Group has taken into account the clarifications made by the IFRS InterpretationsCommittee (IFRIC) in its July 2009 update on the notion of significant or prolonged decrease in paragraph 61of IAS 39. As at 31 December2019, there is objectiveevidenceof impairment in the followingcases: the financial investmentwas already covered by a reserve at the ● previous publishedclose; or a 50% discountis observed as at the closing date; or ● the financial investmenthas been in a continuousunrealisedloss ● position with respect to its book value over the last 36 months prior to thebalance sheet date. EQUITY INSTRUMENTS CLASSIFIED AS AVAILABLE-FOR-SALE ASSET DEBT INSTRUMENTS CLASSIFIED AS AVAILABLE-FOR-SALE ASSETS

A financial asset classified as available-for-salemay be reclassified outside the categoryof assets available-for-sale, into: the category of investmentsheld to maturity when the intent or ● capacity of the Company changes or when the entity no longer has a reliable assessment ofair value; the category of loans and receivables when the financial asset ● meets the definition of loans and receivableson the date of the reclassification and when the entity has the intent and the capacity to hold the financial asset for the foreseeablefuture or until its maturity. A financial asset classified in the category of investments held to maturitymay be reclassifiedexceptionallyas available-for-saleif the entity’s intent or capacity has changed. Initial recognition (c) The Group recognisesits financialassets when it becomesparty to the contractualprovisions of these assets. Purchases and sales of financial investments are recorded on the transactiondate. Financial assets are initially recorded at fair value plus; for assets not valued at fair value through income, the transaction costs directly chargeable to the acquisition. However, when immaterial the transactioncosts are not included in the acquisitioncost of the financial assets. Repurchasetransactionsare maintainedas assets on the balance sheet. Fair value measurement methods (d) The fair value of financial assets is the amount for which an asset could be exchanged between well-informed, consenting parties, acting under normal market conditions. The fair value of a financial instrument corresponds to its listed stock price on an active market. When the market for this financial instrument is not active, its fair value is measured by valuation techniques using observablemarket data when available or, when not available, by resorting to assumptions that imply some judgment. Pursuant to the amendment to IFRS 7 issued by the IASB in March 2009 and IFRS 13, financial instruments (assets and liabilities)valued at fair value are classifiedaccordingto a three-level hierarchy. These levels depend on whether a valuation model is used and the datasourcesused to populatethe valuationmodels: level 1 correspondsto a price listed in an active market to which ● the entity may have access on the valuation date; level 2 correspondsto the fair value determinedon the basis of a ● valuation model using data directly observable on an active marketor data that canbe determinedfrom prices observed; level 3 correspondsto the fair value determinedon the basis of a ● valuation model using data not observableon a market. Valuation techniques include the use of recent transactions under conditionsof normal competitionbetween informedand consenting parties, if available, reference to the current fair value of another instrument identical in substance, analysis of discounted cash flows, andoption valuation models.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES