GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Any amendment to the structural parameters of the reinsurance agreement and its schedules (rate of quota share, commission rates and loading rate by risk family, thresholds and floors for excess claims beyond their annual monetary indexation and additional retentions, predefined algorithms used in the calculation of the pricing of non-proportional protections, modulation of the premium bases for storm protections according to the risk exposure of each mutual) must be made in the form of a written rider and approved by the Groupama Assurances Mutuelles regional mutuals via the followingprocedure: proposed amendments are drafted by a reinsurance working ● group made up of representatives of Groupama Assurances Mutuellesand the regionalmutuals; subject to the approval of the Chief Executive Officer of ● Groupama Assurances Mutuelles, they are submitted for the agreement of the Chief Executive Officers of the regional mutuals; lastly, they are presented by the Groupama Assurances ● Mutuelles Chief Executive Officer to the meeting of the GroupamaAssurancesMutuellesBoard of Directors,which is as asked to approve the proposed amendments by a simple majority vote, after seeking the recommendationsof the Audit and RiskManagement Committee. The amendmentsmade to the reinsuranceagreementover the past decadeswere promptedby one of two factors: changes in the structure of the mutuals (successive ● combinations,opening up the membershipand takeover of the non-agriculturalrisk portfolio previouslymanaged by the Samda subsidiary) that changed their size and therefore their holding capacity; certain risk categories (major weather-relatedevents, imbalance ● in industrial risks, etc.) required greater empowerment of the mutuals in terms of underwritingcontrol and the costs of claims by increasing their holdings in thoseareas. In particular, after examination and approval of the project by the Group Executive Committee, the proposal by the Executive Management of Groupama Assurances Mutuelles to modify the GeneralReinsuranceRegulationsof the regionalmutualswith effect from 1 January 2014, so that it supports the major objective of recovery of the Group’s operational profitability, was accepted by the Groupama Assurances Mutuelles Board of Directors on 12 December2013. The amendmentnot only seeks to clarify the economic challenges facing Internal Reinsuranceand to bring its structures into line with market practice, with the aim of facilitating their uptake by operationalmanagers,but also, and primarily, to increase the level of involvement of the regional mutuals in the quality of their technical results. Since then, the agreement resulting from this reform has been the subject of several adjustments aimed at making certain mechanisms more adapted to the evolutionof certain segments.

As indicated previously, the reinsurance agreement encompasses all the risks underwrittenby the regional mutuals. It is designed to take into account both the overall balance between them and their specific characteristicsin terms of cover needs. To that end, all the risks are subject to classification, which makes it possible to differentiate amongst the reinsurance solutions offered while ensuring inter-company consistency. Classification of reinsured risks (b) Risks are classified into two groups of reinsurance segments, depending on the nature of their need for protection, which is based on their degree of volatility. Classificationof risks is carried out in two groups ofreinsurancesegments: SEGMENTS OF GROUP 1 The first group consists of the followingsegments: Automobile/Personal Liability –Miscellaneous Liability; ● Professionals third-party liability; ● Fire; ● Storm; ● Personal insurance excluding health; ● Health. ● Given their characteristics, the segments of the first group are subject to relatively similar reinsurance arrangements and to the allocation to each regional mutual fund of share in the profits calculated on all results ceded by it as a quota share for these segments. OTHER SEGMENTS These are risks that, given their significant specificities,are subject to highlydifferentiated reinsurance, mainly: Crops; ● Natural disasters; ● Construction; ● Long-TermCare; ● Forests; ● Assistance; ● Attacks (inthe senseof the Gareat pool). ● The price of reinsurance of each regional mutual may take into account, according to the characteristics of each segment, the quality of theceded results,by applying commonrules. Regardless of the risks considered, the stake of Groupama AssurancesMutuellesin claims with respect to the various forms of reinsurance provided for in the general regulations (quota share, excess claims, or annual stop loss) falls within the limit of the scope of the covered risks and exclusionsas well as the limit of its share of maximumcover amountsper insuranceobject, as set each year by Groupama AssurancesMutuelles, in particular according to its own external reinsuranceconditions.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES