GROUPAMA / 2019 Universal Registration Document

7 FINANCIAL STATEMENTS Annual financial statements and notes

Outward reinsurance and retrocessions 3.1.9 Outward reinsurance, mainly to reinsurers outside the Group, on acceptedrisks or direct insuranceis accountedfor under the terms of the various agreements. They may be supplemented by estimates if the current accounts with those reinsurers are incomplete at the end of the fiscal year. The securities taken as collateral by the reinsurers(outward reinsurersor retrocessionaires) are recordedin the statement ofcommitments received and given. Pursuant to the reinsurance agreement, Groupama Assurances Mutuelles makes retrocessions with regional mutuals on various risks acceptedor direct insurance;those transactionsare recorded pursuant to the reinsuranceagreementsigned betweenGroupama Assurances Mutuellesand the regionalmutuals. Entry costs and valuation at year-end 3.2.1 Land and buildings, shares in real-estate (a) investment companies (SCIs) Buildings and shares in unlisted SCIs are recorded at their purchase or costprice. In accordancewith Article 213-8of the ANC regulation2014-03on the French national accounting system, acquisition expenses (transfer taxes, professional fees and registration costs, etc.) are incorporatedinto the acquisitioncost of the shell componentof the asset to which they refer. Pursuantto Article 214-9of ANC regulation2014-03on the French national accounting system, real properties are recorded by component. The four componentsused by GroupamaAssurancesMutuellesare the following: bare structure or shell; ● wind- andwater-tight facilities; ● Investments 3.2

The actuarial reserves for annuities, as determinedby the regional mutuals and accepted by Groupama Assurances Mutuelles, representthe actual value of their commitmentsrelatingto annuities plus their ancillary expenses. The tables applied to assess these reserves are computedwith a financial discount and are based on demographic trends. In life and health insurance,the actuarialreservesfor temporaryand permanent disability annuities are determined according to Article 143-2of ANC regulation2015-11.The discountrate used is 60% of the average TME of the last 24 months plus 10 basis points. Actuarialreservesfor annuitiesallocatedfor traffic accidents occurringon or after 1 January2013 include an annual adjustment with an inflation rate of 2%. For disability annuities in progress, the reservesare determinedby applyingthe maintenanceand disability tables in Articles 600-2and 600-4 of the annex to ANC regulation 2015-11. Regarding actuarial reserves for non-life annuity income, the business also incorporates the population’s lengthening life expectancy.Consequently,actuarial reserves for additional non-life annuity income are posted at the balance-sheetclose in order to calculate the principal to be paid to victims of bodily injury. These are nowbased on the TH/TF2000-2002 mortality tables. Pursuant to Article R. 343-5 of the French Insurance Code, a reserve for liquidity risk is allocated when investments subject to Article R. 343-10,with the exception of amortisable securities that the Companyis able and intendsto hold until maturity,are found to be in a situationof overall net unrealisedcapital loss. This reserve is intended to deal with insufficient liquidity of investments,especially when there is a change in the pace at which claims are paid. Subject to compliancewith the provisions of the French Insurance Code, which allow for an extended schedule for establishing this reserve, contributions to this reserve are spread out over three years. 3.1.8 Inward reinsurance transactions are recognised according to the terms of the Groupama Assurances Mutuelles reinsurance agreement with its regional mutuals, reinsurance treaties entered into mainly with the Group’s other entities and under the professional pools. Inward reinsurance transactions

technical facilities; ● fixtures, finishings. ●

The lifespan and rate of amortisation of each component depend on the period of foreseeableuse of the componentand the nature of the real-estate property. Because the residual value of the bare structure component cannot be measured in a sufficiently reliable fashion, it is therefore not determined, and that component is amortised based on the acquisition cost.

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Universal Registration Document 2019 - GROUPAMA ASSURANCES MUTUELLES