GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

3.3

Foreign exchange risk

Managing foreign exchange risk 3.3.2 Exchange rate risk is currently hedged mainly through currency swaps and forward exchange contracts. The documentation is updated each time the financial statements are closed. These instruments do not correspond to the accounting notion of hedging as defined by IFRS. 3.3.3 The following table shows the impacts on income and the revaluation reserve (posted under group’s equity) of a sensitivity analysis carried out in the event of an up or down change of 10% in all currencies against the euro. 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%. Analysis of exchange rate sensitivity

Exposure to foreign exchange risk 3.3.1 Exposureto foreign exchangerisk for subsidiariesin the eurozone corresponds primarily to their assets, subject to exchange rate fluctuations of mutual funds or securities denominated in foreign currencies and mutual funds denominated in euros applying to foreign-currencysecurities. In practice, the portfolios are exposed primarily to foreign exchange risks correspondingto the euro rate against the dollar, the Hungarian forint, the Romanian leu, the Bulgarian lev, thepound sterling, and theTurkish lira. Investments made by Groupama, within the context of its internationalsubsidiaries,exposes it to the net accountingposition of entities with a different functionalcurrencyfrom the euro. These currently include the Turkish lira, the Hungarian forint, the Romanian leu, the Bulgarian lev, the yuan, and the Tunisian dinar. These impacts are posted in group’s equity, under foreign exchange adjustment.

31.12.2019

31.12.2018

Foreign exchange risk

Foreign exchange risk

+10%

-10%

+10%

-10%

(in millions ofeuros)

Impact on the revaluationreserve

49

(49)

35

(35)

Equities

18

(18)

12

(12)

Equitymutual funds

1

(1)

1

(1)

Bonds

30

(30)

22

(22)

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

Hedging effects are not taken into account when calculating sensitivity. Consequently, the numbers listed above represent maximum risk and the actual impact reported in the Group’s financial statements isconsiderably lower. 3.4 The Group’s bond portfolio breakdown by rating and by type of issuer is presented in Notes 7.8.3and 7.8.4 to the annual financial statements. Credit risk

The Group manages credit risk as part of internal constraints.The main objective of these constraints is to limit the concentrationof issues according to several criteria (country, issuer, ratings, subordinated issues). 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.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES