GROUPAMA / 2020 UNIVERSAL REGISTRATION DOCUMENT

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

The impairment recorded on a shareholders’equity instrument will only be reversed to income when the asset in question is sold. INVESTMENTS VALUED AT AMORTISED COST For investments valued at amortised cost, the amount of the reserve is equal to the differencebetweenthe net book value of the assets and the discountedvalue of the future cash flows expected, determinedon the basis of the original effective interest rate of the financial instrument. The amount of the loss is included in the net income or loss for the fiscal year. The reservemay be written back through income. Derecognition (g) Financial assets are derecognisedwhen contractual risks expire or the Group transfers the financial asset. Gains or losses on the sale of financial investmentsare determined using the FIFO method, with the exception of securities carried by mutual funds. The method used for mutual funds is the weighted average cost method. Gains and losses from divestment are recorded on the income statement on the date of realisation and represent the difference between the sale price and the net book value of the asset. Investment property 3.2.2 The Group has chosen to recognise investmentproperty using the cost method. It is valued using the component approach. Initial recognition (a) Lands and properties appear on the balance sheet at their acquisition cost. The value of the property includes significant transaction costs directly attributable to the transaction, except in the specific case of investment property representing unit-linked commitments that may be posted, by discretion, to income at fair value. When a real estate asset includes a portion held to produce rental income and another part used for production or administrative purposes, the asset is treated as investment property only if the latter is immaterial. At the time of initial recognition, property is subdivided by components and recorded separately. The impairmentperiods applied by the Group for each component depend on the nature of the property under considerationand are as follows: building shell (impairment period between 30 and 120 years), ❯ wind- and water-tight facilities (impairment period between 30 ❯ and 35 years); heavy equipment (impairment period between 20 and 25 years), ❯ secondary equipment, fixtures and fittings (impairment period ❯ between 10 and 15 years), maintenance (impairment period: 5 years). ❯

Reserves for impairment (f) At each closing date, the Group looks for the existenceof objective presumptions of impairment in its investments. DEBT INSTRUMENTS CLASSIFIED AS AVAILABLE-FOR-SALE ASSETS For debt instruments classified as available-for-sale assets, an impairment loss is recognised through income in the event of a proven counterparty risk. Impairments recognised on debt instruments are written back through income in the event of reduction or disappearanceof the counterparty risk. For equity instruments classified as available-for-sale assets, the Group has taken into account the clarificationsmade by the IFRS Interpretations Committee (IFRIC) in its July 2009 update on the notion of significant or prolonged decrease in paragraph 61 of IAS 39. At 31 December2020, there is objectiveevidenceof impairment in the following cases: a financial investment already covered by a reserve at the ❯ previous published period end; or a 50% haircut is observed as of the period end date; or ❯ the financial investmenthas been in a continuousunrealisedloss ❯ position with respect to its book value over the last 36 months prior to the balance sheet date. For securities consideredstrategic securities held by the Group for the long term, as shown by Group representation in their governance bodies or significant, lasting contractual relations or a significant stake in the capital (in absoluteor relative value), without significant influence being exercised, this reference period is 48 months. Where such objective evidence of impairment is observed then the impairment amount corresponding to the difference between the acquisitioncost and the fair value for that fiscal year, less any loss in value previously recognised through income, is automatically recognised in the income statement. These criteria may undergo changes over time, by applying good judgement, in order to take account of changes in the environment in which they were postulated. This should allow abnormal circumstances to be dealt with (such as a sharp and abnormaldrop in net asset values on the balance sheet date). In addition, in all other cases in which these thresholds are not reached, the Group identifies securities in its portfolio constantly presenting a haircut between 20% and 40% over the last six months based on the level of volatility of the financial markets. For the thus separated securities the Group then carries out a review, based on its judgement, security by security, and decides whether to post an impairment through income or not. In the event that the financial managementof a line of securities is done in a comprehensivemanner at the Group level, even when these securities are held by several entities, the determination of whether objective evidence of impairment exists can be done based on the Group’s cost price. EQUITY INSTRUMENTS CLASSIFIED AS AVAILABLE-FOR-SALE ASSETS

161 Universal Registration Document 2020 - GROUPAMA ASSURANCES MUTUELLES