GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS

Statutory auditors’ report on the consolidated financial statements

JUSTIFICATION OF THE ASSESSMENTS - KEY POINTS OF THE AUDIT

Pursuant to the provisionsof Articles L.823-9and R.823-7 of the French commercialcode relating to the justificationof our assessments, we bring to your attentionthe key points of the audit relating to the risks of material misstatementthat, in our professionaljudgement,were the mostsignificant forthe auditof the consolidated financial statements for the fiscal year, as wellas our responsesto theserisks. These assessments contributed to the audit of the consolidated financial statements, taken as a whole, approved under the conditions recalledabove, and to the formationof our opinionexpressedabove.We do not expressan opinionon items in these consolidatedfinancial statements viewed in isolation.

Assessmentof outstandingclaims reserve – Non-lifeinsurance policies (Please referto notes 3.12.2and 26.1of the notes to theconsolidatedfinancialstatements)

Identifiedrisk

Implementedprocedures

Reservesfor claims, appearingon the balance sheet at 31 December 2019 for €8,915 millionin the consolidatedfinancial statements,representone of the greatest liabilities. They correspondto the estimate,net of claims receivable,of the cost of all unpaid claims at the end of the fiscal year, both declaredand undeclared,both in principaland incidentals(managementfees). The estimateof technicalreserves is valued on the basis of an actuarial approach,using ultimate cost valuationsbased on paymenttriangles or expenses(dependingon the risk segments).This valuationalso incorporatesthe valuationof delinquentclaims. It requiresthe exerciseof management’sjudgementin selectingthe assumptionsto be applied, the calculationmethodsto be used, and the relatedmanagementcost estimates. Given the relativeweight of these provisions in the balance sheet, the importanceof the judgementexercisedby managementand the variety and complexityof the actuarialmethodsused, we considered the valuationof these provisionsas a key point of the audit.

In order to assess the reasonablenessof the estimateof the amount of the outstandingclaims reserve, we implementedthe following procedures,using our actuaries: Review the design and test the effectivenessof the key controls n related to claimsmanagementand the determinationof these provisions, Assess the relevanceof the calculationmethodsused to estimate n the reserves, Assess the appropriatenessof the actuarialassumptionsused to n calculatereserves (depth of history taken into account,number of years of stabilisation), Assess the reliabilityof the statementsproducedby your company, n tracing the historicaldata, and reconcilethemwith the data used to estimatethe reserveswith the accountingrecords, Analyse the settlementof the reserve of the previousfiscal year with n the actual expensesof claims (settlementsurplus/deficit), In a number of segments,carry out an independent n counter-valuationor a joint reviewof the assumptionsused to calculatethe reservesand assess their reasonableness.

Valuationof unlisted instruments (classification in level 3in IFRS) (Please referto Notes 3.2.1 and 7.9to the consolidatedfinancialstatements)

Implementedprocedures

Identified risk

As part of its activity has an insurancegroup, Groupamaholds financial instrumentsnot listed on an activemarket classifiedas Level 3 in the fair value hierarchyaccordingto IFRS 13. These financial instrumentsrepresent€2,207 millionon the assets side of the Group’sconsolidatedbalance sheet at 31 December 2019. These instrumentsare measuredat fair value on the basis of internal valuationmodelswhere the parametersare not observableor cannot be corroboratedby market data. The resultingvaluationsmay be subject to additionalvalue adjustments to take accountof certainmarket, liquidity,or counterpartyrisks. The techniquesused by managementto value these instruments include a significantamount of judgementin the choice of methodologies,assumptions,and data used. Due to the material nature of the outstandingamountsand the significantshare of assessmenton the part of Managementin determiningthe market value, we believe that the valuationof financial instrumentsclassifiedas Level 3 under IFRS 13 is a key point of the audit.

In order to assess the reasonablenessof the estimationof the applied values of unlisted investments,our audit approachwas based on informationprovidedto us by your companyand includedthe following work: Comparethe applied value with the net asset value of the n managementcompany,the latest transactionsobserved in the market for the examinedsecurity,a comparablewhere possible,or valuationscommunicatedby counterparties, Where the securitywas valued on the basis of an internal model: n Analyseof the relevanceof the assumptionsand parameters n used, Reviewof the constructionof the model and inputs (data) used n for the valuation, An independentcounter-valuationby sampling,using our own n models.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES