GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Financing of large programmes 3 Groupama Assurances Mutuelles participates in the financing of major communityprogrammesby paying subsidies to the regional mutuals designed as incentives for them to implement an overall policy in the general interest. This system results from the Group’s decentralised structure and from the role played in it by Groupama Assurances Mutuelles, which manages the Group and reinsuresthe regional mutuals. organisation In a so-called decentralised organisation, the central body arises from the regional level; its role is to embody the collective will and steer the resulting policies, but from a legal standpoint, it does not have the power to impose those policiesat regional level. Financing is one lever used to facilitate the implementation of the group policies. Moreover, the programmes stemming from these policies usually generate high costs in the beginning with regard to the financial coverage of the regional mutual, with no immediate counterparty, and involve a business risk making the return on investment random. At the level of a regional mutual, implementing such programmes using its own resources seems contrary to its interests, at least in theshort term. Pooling the financingby GroupamaAssurancesMutuellesmakes it possible to remove this obstacle and to re-establish within the combination consisting of the regional mutuals the national dimensionthat would exist were this combinationnot legally divided into regional mutuals. As indicated above (see section 1.1), the reinsurance relationship betweenGroupamaAssurancesMutuellesand the regionalmutuals creates a powerful community of interests amongst them. GroupamaAssurancesMutuellesitself has a major interest not only in the economic and financial balance of the mutuals but also in their growth, in which it participates in proportion to the non-life insurance business transferred. Hence it is directly in the interests of Groupama Assurances Mutuelles to participate in some expensesincurred in expanding the regional mutuals. 3.3 To qualify for financing by Groupama Assurances Mutuelles, a programme must meet several conditions: it must be part of thestrategydefinedby the Group; ● 3.1 Interest of the central reinsurer in expanding the business lines of the regional mutuals 3.2 A rational, efficient system

it must represent for most of the regional mutuals a financial ● expense that would disincentivise them from financing the programme alone; it must have the potential to be replicatedacross all the regional ● mutuals. The financingis discontinued once it ceases to be necessary. This system has demonstrated its effectiveness in the past few years. Two major programmes have achieved significant results, namely the development and launch of a new offering in individual supplementary health insurance, funded by Groupama Assurances Mutuelles from 1999 to 2007, as well as the development and deployment within the regional mutuals of the SIGMA non-lifeinsurance management system. The programme supporting the deployment of the retail banking business in the regional mutuals has been in progress since 2004. This business requires a major effort on the part of the regional mutuals, especially in terms of sales force training and management. The subsidies related to achieving sales objectives are designed to end when the retail banking business reaches its financial breakeven point. For fiscal year 2017, it was considered that although the banking business is now carried out by a Groupama Assurances Mutuelles holding and no longer a subsidiary, it was necessary to maintain a subsidy mechanism between Groupama Assurances Mutuelles and the regional mutuals, aimed at supporting the revival and development of this business and offsetting the distribution costs of the mutuals, as long as the portfolio of banking products was not sufficiently developed to self-fund through commissions.For fiscal year 2019, the amount of financial support devoted to deploying the banking businessthus came to a total of €1.9 million, net of corporate tax. For the first time in 2015, GroupamaAssurancesMutuellescovered the costs resulting from the issue of mutual certificates for the regional mutuals. In 2019, GroupamaAssurancesMutuellespaid a subsidy of €14.7 millionnet of corporate tax for mutual certificates issued in 2019by 9 regional mutuals. Lastly, for the first time in 2019, Groupama AssurancesMutuelles covered the costs resulting from the EIFFEL project. In 2019, Groupama Assurances Mutuelles paid the regional mutuals in metropolitan France a subsidy of €0.8 million net of corporate tax. Overall, the final amount of 2019 expenses for Groupama Assurances Mutuelles with respect to financial support for the regional mutualswas €17.4 million net of corporate tax. With regard to transactions under the regime of regulated agreements,the financingof major national programmesis subject to review by the Audit and Risk Management Committee before being authorised by the Board of Directors of Groupama Assurances Mutuelles.

Operational structure of a decentralised

Employees of consolidated companies Note 47

This noteis presentedin § 1.5.2 of this universal registration document.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES