GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

The calculationof life insuranceunderwritingreserves is also based on the use of an interest rate known as the “underwriting interest rate”, the conditions of which are fixed in France by the French Insurance Code. In France, the terms of this rate are set by the Insurance Code, which determines a maximum level by reference to the average rate for governmentborrowings(the TME). which is used to set rates for policies and calculate the insurer’s commitments to policyholders. The terms and conditions vary based on the type of policy and the duration of the commitments. The reservingstandardsas well as the principlesof measuringand controlling reserving risk are specified in the Group underwriting and reserving policies.

The breakdownof technicalreservesand life and non-life insurance policies is presented in Note 26.1 of the annual financial statements. BREAKDOWN OF ACTUARIAL RESERVES ACCORDING TO THE CRITERIA OF COMMITMENTS AT FIXED RATE, VARIABLE RATE, OR ABSENCE OF RATE COMMITMENTS The breakdown of actuarial reserves based on fixed-rate, variable-rate ( i.e., tied to a market rate) or no rate commitments was as follows:

31.12.2019

31.12.2018

France

International

Total

Total

(in millions of euros)

Commitmentsguaranteedat fixed rate

35,615

2,736 38,352

38,784

Commitmentsguaranteedat variable rate

7,601

20

7,622

7,721

Unit-linkedand other productswithout rate commitment

10,708

1,022 11,730

10,261

TOTAL

53,925

3,779 57,703

56,766

Terms and conditions of the insurance policies which have a material impact on the amount, maturities, and uncertainty of the insurer’s 2.3.1 The Group offers a broad range of non-life insurance products designed for individuals, institutions and businesses. The motor, individual, professional and agricultural property damage policies offered by the Group are generally one-year contracts with tacit renewal, which include third-party liability coverage. The Group offers a full line of life insurance products: this offer is packaged for individuals in the form of individual policies and for businessesin the formof group policies. The main individual insurancepolicies in euros offered to our clients are savings policies, term life policies, mixed insurance policies, deferred annuity policies with mandatory withdrawal in annuities, and deferredcapital contractswith return of premiums. The group policies offered by the Group are essentially defined contribution pension plans and pension contracts by collective capitalisation in pointswith point value. The Group also sells multi-componentpolicies with one investment component in euros and one or more components in units of account. 2.3 future cash flows General description

The proportion of guaranteed-rate commitments continued to decrease slowly. The share of unit-linked and other products without rate commitment decreased, representing 20.3% of total commitments( versus 18.1% at the end of 2018). 2.2.4 Reinsurance is organised on two levels. The Internal Reinsurance performed by Groupama Assurances Mutuelles for all Group entities is designed to optimise retentions for each entity. The external reinsurancedefines the optimum reinsurancestructure for the Group and the level of risk coverageon the bases of computer models. External reinsurance contracts are renegotiated and renewed each year by Groupama AssurancesMutuelles on behalf of the entire Group. Moreover, selection rules defined in the Reinsurance SecuritiesCommittee,which is composedparticularly of the Reinsurance Division of Groupama Assurances Mutuelles and the Group Risk ManagementDepartment,which are based on the ratings from ratings agencies, are designed to control the default risk of reinsurers. The list of reinsurers is reviewed in its entirety at least twice a year. During the year, continual monitoring is performed to adapt the internal ratings of the reinsurersto changesthat may occur to them that would modify their solvency assessment. Approvedreinsurersmust have a rating compatiblewith the type of business reinsured, depending on whether they have a short or long accountingrun-off. The reinsurance principles and arrangementsare described in the Group reinsurancepolicy. Reinsurance

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES