GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

General structure of protections (c) As indicatedabove, all risks are subjectto quota share reinsurance, the rateof which variesaccordingto the risks. These cessions occur on operations net of non-proportional protections for the segments benefiting from them, with the exceptionof the “natural disasters” segment. The stake of GroupamaAssurancesMutuelles stake in claims falls within the limits indicated above but does not include any aggregate-type limitations, except in case of forest insurance, where the protections apply to an annual cumulative loss of no more than 15% of the insured assets declared to Groupama Assurances Mutuelles. In “natural disasters”, the “premium transfer basis” calculated to take account of the rate of deductionof the fund for preventionof major natural hazards is 88%. The “origin” business of the regional mutual fund before the quota share cession, for the segments concerned, of excess claim or annualstop loss protections. In addition,the regionalmutual is coveredfor excess annual losses, across the storm, crop, and natural disasters segments,protecting the accumulation of claims kept below the non-proportional protection threshold of each segment, the capacity of which is capped. For the coverage of claims by these various non-proportional protections, the rules already described apply in the same way: application of limitations relating to the field of covered risks, exclusions, maximum amounts of commitments by risk object defined and specified annually by Groupama Assurances Mutuelles. When the regional mutual wishes to issue a guarantee outside the scope of the risks covered, or whose amount exceeds the limits provided for in the general regulations, it asks Groupama Assurances Mutuelles for optional reinsurance cover, which is acquired only after express agreement and on the basis of the conditions laiddown in this framework. The non-proportional reinsurance thresholds are set for all the regional mutuals (based on two classifications by mutual and by segment)accordingto the collectivedecisionprocedurereferred to in paragraph 1.1,based on studies and simulations examined by the “reinsurance” working group to verify the sensitivity of the custodyby the mutualsat their level, taking into accountthe effects in terms ofcost. For excess claims, except in case of more substantialchanges,the thresholds are indexed annually according to price indices specific to the risks concerned.

For the operation of reinsurance in excess claims, the regional mutual may generally constitute by segment a single event of all indemnifiableclaims, regardlessof the number of policies or covers involved, resulting from the same event and occurring during a continuous period. Retrocession (d) Outward reinsurance by the mutuals with a central reinsurer does not deplete the capacities for pooling and retention within the Group. Given their level of equity, the mutuals have the capacity to bear a portion of the risk offset nationally,and protectedby outside reinsurance. They become in turn the reinsurer of Groupama Assurances Mutuelles. This allows the total results of the highest risks of reinsurancerisks accepted to be shared between Groupama AssurancesMutuelles and the mutuals, and lowers the thresholds for assigning risks to third party reinsurers. It is for that purposethat GroupamaAssurancesMutuellesconveys back to the mutuals part of the profit/loss from its total inward reinsurance, net of the effect of outside cover, in the only reinsurance risks or forms showing volatility justifying this use of additional mutualinsurance. The Groupama Assurances Mutuelles quota share inward reinsurance is thus not affected by the retrocession, with the exceptionof the naturaldisasters andcrops segments. A significant percentage of the inward reinsurance business is retroceded. Transactions that are the subject of a retrocession are divided amongstthe regionalmutuals in proportionto the premiumskept in the totalof the segmentsafter all forms ofreinsurance. Aside from its effect on internal mutual insurance, retrocession raises the awareness of and directly involves the mutuals community in the balances of their different outward reinsurance operations with Groupama Assurances Mutuelles, and as such constitutes an additional regulatory factor. Amounts involved in fiscal year 2019 (e) It should be noted that non-life premiums earned, policy servicing expenses, acquisition costs, and administrative expenses include inward reinsurance, with respect to Groupama Assurances Mutuelles,from the regional mutuals under the internal reinsurance agreement.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES