GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Underwriting operations 3.12 Classification and method 3.12.1 of recognition There are two categories of contract issued by the Group’s insurance companies: insurance policies and financial contracts with discretionary ● profit-sharing,which are governed by IFRS 4; financial contractswithout discretionaryprofit sharing, which are ● governed byIAS 39. Insurance policies (a) An insurancepolicy is a contract accordingto which one party (the insurer) accepts a significant insurance risk of another party (the policyholder) by agreeing to compensate the policyholder if a specifieduncertainfuture event (the insuredevent) adverselyaffects the policyholder.An insurance risk is a risk, other than a financial risk, transferred from the policyholder to the issuer. This risk is significant when an insured event may require an insurer to pay significant additional benefits whatever the scenario, with the exceptionof scenariosthat lackbusinesssignificance. The existing accountingpractices for insurance policies subject to IFRS 4 continue to be maintained, with the exception of the equalisation reserves as defined by IFRS 4 which have been annulled, provided that the reserves thus established meet the solvency tests stipulated by international standards (see paragraph 3.12.2.c). Financial contracts (b) Contracts that do not meet the definition of insurance policy as described above are classified as financial contracts. Financial contracts are broken down into two categories:financial contracts with andwithout discretionary profit sharing. A discretionary profit-sharing clause is defined as the contractual right held by a subscriber to receive an additional payment or another benefit, the amount or maturity of which is fully or partially at the discretionof the insurer and the valuation of which is based either on the performance of a set of contracts or a determined contract, either on the income or loss of the insurer, a fund, or any other entities having issued the contract or on realised and/or unrealised investmentreturns of a portfolio of specifiedassets held by the issuer. The accounting methods for financial contracts with discretionary profit sharing are identical to the methods for insurance policies described above. Financial contracts without discretionary profit sharing are treated using the valuation procedures described in paragraph 3.12.3.

Insurance policies under IFRS 4 3.12.2 Non-life insurance policies (a)

PREMIUMS Written premiums represent the gross premiums, before reinsurance and tax, net of cancellations, reductions, rebates, of the change in premiums still to be written and of the change in premiums to be cancelled. Written premiumsadjusted for the change in reserves for unearned premiums (whichare defined below) constitute earned premiums. INSURANCE POLICY SERVICING EXPENSES Non-life insurancepolicy servicingexpensesmainly include benefits and expensespaid and the change in reservesfor claims and other technical reserves. Benefits and expenses paid relate to the claims settled net of claims receivable collected for the fiscal year and the periodic payment of annuities. They also include the fees and commissions for themanagement ofclaims and payment for services. TECHNICAL LIABILITIES RELATED TO NON-LIFE INSURANCE POLICIES Reserves for unearned premiums The technical reserves for unearned premiums represent the portion of premiumsfor the period between the inventorydate and the next contract payment date. They are calculatedon a pro rata basis. Reserves for unexpired risks The reservesfor unexpiredrisks are intendedto coverthe portionof the cost of claims and the related managementfees that exceeds the fractionof deferred premiums net of deferred acquisition costs. Outstanding claims reserves The outstanding claims reserves represent the estimate, net of claims receivable,of the cost of all unpaid claims at the end of the fiscal year, both declared and undeclared. They include a charge for management fees that is determined on the basis of actual expense rates. For construction risks, in addition to the outstanding claims reserves (declared or not yet declared), separate claims reserves that have not yet appeared are also funded for the ten-year civil liability coverage and the ten-year coverage against structural damage. Reserves are assessed on the basis of the type of specific risks covered,particularlyagriculturaland climate risks and risks that are highly seasonalin nature.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES