GROUPAMA / 2020 UNIVERSAL REGISTRATION DOCUMENT

5 GROUP RISK FACTORS The Group’s main risks

Regulatory development risk 5.1.3.2 New laws or regulations,or changesto them, can have a significant impact on companies, business activities, or markets. The Group’s activity is subject to detailed regulation and rigorous supervision in the countrieswhere it operates. Such regulationand supervision are subject to new regulatory or legal provisions, whether in terms of Solvency 2 obligations, IFRS 17 on the recognition and measurement of insurance contracts, obligations under Sapin 2, including corruption risks, or the Insurance Distribution Directive (IDD). These various regulations and laws generate implementation costs and a non-compliance risk. The Group is exposed to the risk that changes in laws or regulations, or their judicial interpretation, or new provisions may result in losses due to their negative impact on the income or performance of the Group’s entities. For example, for 2020 and 2021, the Group is subject to exceptional taxation on Healthcare premium income of approximately €91 million. The regulatory development risk is considered “significant”. Reputational risk 5.1.3.3 The Group is a major economicplayer in France (media visibility). It insures 11.5 million customers, employs 31,000 people, and is linked to all sectors of economic activity in France, whether as an insurer or an investor. Its reputation may be harmed by unfavourable media coverage (articles in the press or on the Internet) or by litigation in connection with a claim. It may be threatened by defamatoryinformationabout its financial position, its management, its handling of a health crisis or natural disaster, its duty to advise, a publicised dispute, or a brand partnership. For example, the increase in consumer programmes with a large TV/radio audienceand the use of social media,where all customers can express themselves, has led to an increase in the number of publicised disputes likely to harm the confidence essential to the Group’s business. For the Group, the reputational risk is considered “moderate”.

5.1.4

COVID-19

In order to best manage the consequencesof this unprecedented global pandemic, the Group, as an insurer and economic player, closely monitored the various risks involved throughout 2020 through its monitoringindicators,governancebodies, and Business Continuity Plans. Groupamahas supported its customersand policyholdersthrough several actions: premium reduction measures, especially for professionals; ❯ contribution to the solidarity fund to support small and ❯ medium-sized enterprises and the self-employed; and citizen measures to support research institutes and university ❯ hospitals. Groupama also committed to investing in investment funds promoting the recovery of French SMEs and midcaps, primarily targeting the health and tourism sectors. In its underwritingbusiness, the group-levelimpact of Covid-19has not been exactly the same in France, where the portfolio is highly diversified, and internationally, where business (mainly non-life) in most countries is relatively focused on motor insurance. In France, Covid-19 has especially affected the Group’s non-life businesses,given the measurestaken to support its customersand members, such as premium reduction and contribution to government spending through the health tax. Internationally, the situation is not comparable between some countries heavily affected by the pandemic, such as Italy, and other less-affected countries, such as Eastern Europeancountries, Turkey, and China. However, the health crisis has resulted in decreased premium income in most countries, stemming from the various measures granted to customers, but with positive effects on the loss experience, which benefited from a lower frequency of motor insurance claims as a result of the lockdown measures. The Group has benefited from a diversification effect associated with its geographical presence as well as its various businesses, which have demonstratedan overall resilienceto this crisis. Despite the mixed performanceof financialmarketsand the unprecedented context of the pandemic,the Group’ssolvencyratio stood at 152% without transitionalmeasuresand 244%with transitionalmeasures at 31 December 2020. However, the Group’s situation could be further impacted by Covid-19 if the pandemicbecomesmore severe and/or prolonged and if economic growth is delayed.

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Universal Registration Document 2020 - GROUPAMA ASSURANCES MUTUELLES