GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Risk of variation in the price of equity instruments (stocks) Type of and exposure to equity risk 3.2.1 Exposure to equity markets allows the companies to capture the yield on thesemarketsbut also exposesthem totwo major types of risks: accounting reserving risk (reserve for long-term impairment, ● reserve for contingent payment risks, reserves for financial contingencies); the commercialrisk broughtabout by the reservingrisk insofaras ● policyholder compensation could be impacted by the aforementioned reserving. The weight of equity instruments out of total financial investments (including operating property) was 5.4% in market value, not including option exposures. Most equity instruments are classified in “available-for-sale assets”. Equity instruments include: equities in French and foreign companies listed for trading on ● regulatedmarkets.The exposurecan also be done in index form and possibly in the form of structured products whose performanceis partially indexed to an equity index. They may be held directly or withinmutual funds(FCP and SICAV); equities in Frenchand foreigncompaniesthat are not listed. They ● may be held directly or in the form of a venture capital fund (“FCPR”). 3.2

Group risk management 3.2.2 The Group manages its hedging and exposure tactically, on the basis of market levels, with little change in exposureover 2019. The Group also pursued its diversificationpolicy through commitments in unlistedequities. The Group manages equities as part of internal constraints under two distinct logics: a primary limit fixing the maximumpermissibleexposureto equity ● risk; a set of secondary limits with the objective of limiting the equity ● portfolio’s concentrationby sector, issuer, or major type as well as illiquidequity categories. These limits are observed at the level of each insurance entity and at the Group level. Any exceedingof the limits is handledaccording to whether it is part of an entity or the Group by the corresponding Risk Committees. risk analysis The following table shows the impacts on income and the revaluation reserve (classified under group’s equity) of a sensitivity analysiscarriedout in the event of an up or down changeof 10% in stock marketprices and indices. The impacts are shown after taking the following factors into consideration: the rateof profit sharing of the entity holding the securities; ● the current tax rate. ● In fiscal year 2019, the profit-sharingrate used for entities holding life insurancecommitmentscorrespondedto a range of 63.98% to 87.60%. Sensitivity of financial investments to equity 3.2.3

31.12.2019

31.12.2018

Equities risk

Equities risk

+10%

-10%

+10%

-10%

(in millions ofeuros)

Impact on the revaluationreserve

76

(76)

59

(59)

Equities

42

(42)

34

(34)

Equitymutual funds

34

(34)

25

(25)

Bonds Fixed-incomemutual funds Derivative instrumentsand embeddedderivatives Impact on net income

8

(8)

10

(10)

Equities Equitymutual funds

8

(8)

10

(10)

Bonds Fixed-incomemutual funds Derivative instrumentsand embeddedderivatives

248

Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES