GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Annual financial statements and notes

Premiums 3.1.1 Premiums for the year relate to direct business and mainly to inward reinsurance. They include: premiums forthe fiscal year, net of cancellations; ● variation in premiums still to be written; ● variation in premiums tobe cancelled. ● These premiums are corrected for variation in unearned premiums and constitute theamount of earnedpremiums. 3.1.2 The reserve for unearned premiums for all policies in force at the fiscal year-endshows the share of premiumswritten and premiums yet to be written relating to the risk coverage in effect for the year or years following the reporting year. It is calculated prorata temporis . 3.1.3 Costs relating to the insurancebusiness are recordedaccordingto their nature. They are classified for the presentationof the financial statements according to the purposes of the claims management costs, acquisitioncosts, administrationcost, investmentcosts, and other technical costs. Acquisitionand administration costs mainly include: commissions paid by Groupama Assurances Mutuelles to the ● regional mutuals. These are determined pursuant to the provisions stipulated in the reinsurance agreement with the regional mutuals and are calculated based on the earned premiums that Groupama Assurances Mutuelles accepts from the regionalmutuals; commissions assessed on direct business and other inward ● reinsurancebusiness. Deferred acquisition costs 3.1.4 A portion of the general expenses of Groupama Assurances Mutuelles allocated for the acquisition of contracts and commissionson direct and acceptedbusiness is posted to assets in the balance sheet. This is the share of acquisition expenses pertaining to unearnedpremiums. services and expenses paid for in connection with direct ● business or that accepted under reinsurance treaties which equate the claims paid net of remedies to be received for the year plus periodic annuity payments. They also include claims-related expenses. These claims also include periodic payments of annuities managed directly by Groupama Assurances Mutuelles, as well as management costs from the distribution of general expenses; the reservesfor claims in direct businessand inward reinsurance ● business represent the estimate, net of projected claims receivable,of the cost of all unpaid claims at the end of the year, both declared and undeclared. These reserves also include charges for managementfees determinedon the basis of actual expense ratesobserved byGroupama Assurances Mutuelles. Reserve for unearned premiums Costs relating to the insurance business Claims 3.1.5 The claims expense for the year consists mainly of:

The estimatedvalue of reserves for claims is based on an actuarial approach, defined in accordance with a group methodology. By means of valuations of final costs based on payment triangles or costs (by risk segment), it permits a determinationof the sufficient amount of outstanding claims reserve. This valuation incorporates the valuationof delinquentclaims into its approach.The amountsof these reserves are indicatedin Note 11. In construction risk, the reserve for claims yet to be made comprises direct claims and inward reinsurance from the regional mutuals is two-pronged.One component is set aside for ten-year coverage for general liability and the other is for ten-year coverage for property damages. This reserve is determined in accordance with the provisions of Articles 143-14 and 143-15 of ANC Regulationno 2015-11. Outstanding claims reserves for annuities allocated for traffic accidents occurring on or after 1 January 2013 include an annual adjustment withan inflationrate of 2%. The technical reserves for incapacity and invalidity benefits are calculated in accordance with Article 143-12 of ANC Regulation no 2015-11.The discount rate used is 75% of the average TME of the last24 months. 3.1.6 Pursuant to Article R. 343-7.6°of the French Insurance Code, an insurance company may establish so-called equalisation reserves to cover extraordinaryexpensesrelating to operationsto guarantee risks due to natural factors, nuclear risk, risks of civil liability due to pollution, space risks, as well as risks relating to attacks, terrorism and air transport.These reserves are funded voluntarily.Groupama AssurancesMutuellescomputesthis reservebased on the share of risks it insures or reinsures or that is obtained through its share of the results owing to its shareholding in certain professional pools. The amounts of these reserves are indicatedin Note 11. 3.1.7 A reserve for unexpired risks is allocated when the estimated amount of claims (including management costs) that could be reported after the year end on policies written up before that date exceeds the reserve for unearnedpremiums. The reserve for increasing risks defined in Article R. 343-7of the French InsuranceCode is the differencebetweenthe currentvalues of the commitments taken respectively by the insurer and by the policyholdersfor insuranceoperationscoveringhealth and disability risks. This reserve concerns the reserves formed in long-termcare insurance as well as those on business accepted. The amount of this provision isindicatedin Note 11. The actuarial reserves for annuities are based on the discounted values of annuitiesand annuity ancillariesstill owed at the inventory date. This item includes the reserves set aside against direct business and supplementary reserves on inward reinsurance business. Equalisation reserve Other underwriting reserves

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES