GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

The reconciliation with the theoretical statutory tax isas follows:

31.12.2019

31.12.2018

Consolidated income (losses) before tax

Consolidated income (losses) before tax

Theoretical taxrate

Theoretical taxrate

(in millions ofeuros)

current taxes: 34.43%

current taxes: 34.43%

France

520

423

deferredtax: 32.02%

deferredtax: 32.02%

Bulgaria

10.00%

1

10.00%

China

(4)

25.00%

4

25.00%

Greece

11

24.00%

15

28.00%

Hungary

26

9.00%

25

9.00%

Italy

(282)

30.82%

(54)

30.82%

Romania

(13)

16.00%

2

16.00%

United Kingdom

19.00%

Tunisia

3

30.00%

1

30.00%

Turkey

15

22.00%

21

22.00%

TOTAL

276

438

The theoretical tax rate applicable in France remains 34.43% on determinedincluding the gradual reduction in corporationtax rates current taxes and becomes 32.02% on deferred taxes. It is to 25.82% by2022. emphasised that within France, deferred taxation has been Theoretical tax rates remained unchanged over the period.

Related parties Note 46

General presentation 1 Groupama Assurances Mutuelles and its subsidiaries maintain close, long-lasting economic relationships with the regional mutuals.These relationshipsfocus mainly on the reinsuranceof the regional mutuals by Groupama Assurances Mutuelles and, to a lesser degree, on business relationships amongst the subsidiaries of GroupamaAssurancesMutuellesand the regional mutuals in the areas of insurance,banking,and services. Premium income earned by Groupama AssurancesMutuelles and its consolidated subsidiaries through the network of regional mutuals comes mainly from Groupama AssurancesMutuelles and GroupamaGan Vie. Basedon these two entities,the contributionof the network of regional mutuals to consolidatedpremium income totalled €3,300 million, or 31.57% of total consolidated premium income for2019. The resulting economic inter-dependence led the Group’s two major divisions to enter into agreements to protect the security of the entity as a whole. 1.1 Regional mutuals are required by law to obtain reinsurance exclusivelyfromGroupama Assurances Mutuelles. This requirementis laid down in the bylaws of the regional mutuals. This reinsuranceexclusivityengendersfinancial solidarity over time, resulting in a transfer of a substantial proportion of the insurance Reinsurance

business from the regional mutuals to Groupama Assurances Mutuelles. The reinsurance relationship is based on the principle of “shared future” between the regional mutuals as ceding companies and their reinsurer GroupamaAssurancesMutuelles.The principle aims to ensure that over the long term, there are neither winners nor losers betweenceding companies and their reinsurer. Implementing this principle means a major use of quota share reinsuranceand the reinsurer’sparticipationin the direct insurance managementdecisionswhich determinethe financial return for the whole. Thus, Groupama Assurances Mutuelles either helps to draft the technical terms and conditions for direct insurance, particularly regarding rates, or else it drafts those conditions itself depending on the nature of the risksbeing reinsured. In addition,GroupamaAssurancesMutuellesmay participatein the handling of any claims file and jointly manages any claim with an estimated cost that exceeds certain thresholds. Also under the reinsuranceagreement,there is a certain number of mechanisms for quickly rectifyingany imbalances. The shared future arrangement introduced between the regional mutuals and Groupama AssurancesMutuelles also contributes to certain specific expenses in expanding insuranceportfolios (project financing, experimentation,joint ventures, etc.)once those projects become part of the Group’s strategy and have the potential to be

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES