GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

replicated throughout the regional mutuals, as quota share reinsurance gives Groupama Assurances Mutuelles the means to contributeto the futureresultsof the portfoliosthus expanded. This reinsurancerelationship is designed to continue over the long term, and the duration of the reinsurance agreement between GroupamaAssurancesMutuellesand the regional mutuals is equal to that of Groupama Assurances Mutuelles itself, which, unless extended, will expire in 2086. Any modificationsto the agreement must be made via a consensus-baseddecision-makingprocess, whereby final approval lies with the Groupama Assurances MutuellesBoardof Directors,after receivingthe recommendationof the Audit andRisk Management Committee. This reinsurance relationship has led to a powerful community of interests between the regional mutuals and GroupamaAssurances Mutuelles. On the one hand, the regional mutuals have a vital interest in preserving the economic and financial balance of their exclusive reinsurer. On the other hand, Groupama Assurances Mutuelles has a major interest not only in the economic and financial balanceof the mutuals,but also in their growth, in which it participates in proportion to the non-life insurance business transferred. The reinsuranceagreementis describedin more detail at § 2.1. Groupama Assurances Mutuelles and the regional mutuals enjoy business relationships through various subsidiaries of Groupama Assurances Mutuelles. The role of these subsidiaries is either to offer productsor services designedfor membersand customersin the areas of insurance, banking or services, or to provide financial resources to theentitiesof the Group. These business relationships are governed by a principle of preference for the Group up to and including exclusivity, which is based on the interest of the regionalmutuals in meetingtheir needs for products or services and in achieving a return on the investments made in the subsidiaries through Groupama Assurances Mutuelles. The preferential nature of these relationships is laid out in an agreement approved by the Groupama Assurances Mutuelles Boardof Directorsin its meeting of 14 December 2005. Under that agreement, the respective commitmentsof Groupama Assurances Mutuellesand the regionalmutuals are: Groupama Assurances Mutuelles shall ensure that the ● subsidiariesoffer productsor servicesthat meet the needs of the market ( i.e., products or services designed for members or customers)or the needs ofthe entitiesof the Group ( i.e., financial servicesdesignedfor the Groupentities)and that are competitive compared to the products offered by competing companies in terms ofprice and quality of service; Business relationships between the subsidiaries of Groupama Assurances Mutuelles and the regional mutuals in the areas of insurance and services 1.2

the regionalmutuals agreeto the following: ● concerning the subsidiaries offering products or services ● designed for membersand customers: not to distribute, under any circumstances, competing - third-party products or services, to distribute the products or services of the life insurance - and employeesavingssubsidiaries, to distribute the services of the non-life insurance - subsidiaries or those of the insurance-related services subsidiaries if they themselves do not offer those services and decide tooutsourcethem; concerningsubsidiariesoffering financial services designedfor ● the Group entities: to give preference to those subsidiaries in terms of equal - price and qualityof service. The creation and growth of subsidiariesoffering insuranceservices or related services to members and customersof the Group are in response to the need for the regional mutuals, whose main business is limited by law to non-life insurance,to have a full range of financial services to offer while sharing amongst themselves through Groupama AssurancesMutuelles the investment required to create andrun a profitablesubsidiary. Such is the case for the life insurance products of GroupamaGan Vie, the services offered by Groupama Épargne Salariale and a number ofservice subsidiaries (Mutuaide, CapsAuto, FMB, etc.). It is in the interests of Groupama Assurances Mutuelles to make these investments, for three reasons: owing totheir intrinsicreturn going forward; ● owing to the communityof interests between it and the regional ● mutuals because of reinsurance, Groupama Assurances Mutuelleseither benefits or suffers from any progressor setback in the position of the regional mutuals in the non-life insurance market. It is thereforein its direct interestfor the regionalmutuals to have a competitiveoffering in other sectors of the market (life insurance, financial services, etc.) so it can be on an equal footing with the other general insurancecompaniesactive in the marketor with bancassurancecompanies; the investments made in those subsidiaries enable the ● subsidiariesof Groupama AssurancesMutuelles distributing the Gan brand to have a servicesofferingas well; such is the case of retail banking,employee savings, insurance-related services, etc. It should be noted that until October 2016,GroupamaAssurances Mutuelles held 100% of the capital of Groupama Banque, whose retail banking offer was marketed by the regional mutuals. Since October 2016,GroupamaAssurancesMutuelles no longer holds a minority stake in Groupama Banque, which is now Orange Bank. The regional mutuals continue to distribute the retail banking offeringof this GroupamaAssurancesMutuellesinvestment.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES