GROUPAMA / 2020 UNIVERSAL REGISTRATION DOCUMENT

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

Financing liabilities 3.11 Financing debts include subordinated liabilities, financing debts represented by securities, and financing debts owed to banking institutions. In the absence of a specific IFRIC interpretation, commitments to purchase non-controllinginterestsare recorded in financingdebt at current fair value (strike price of the option). The cross-entry of these debts is recognisedeither in goodwill for put options granted before 1 January 2010 or as a reduction in Group’s equity for put options contracted subsequent to this date. Initial recognition 3.11.1 Financing debt is recognisedwhen the Groupbecomesparty to the contractual provisionsof this debt. The amount of the debt is then equal to the fair value, adjusted if necessary for the transaction costs directly chargeable to the acquisition oisrsue of such debt. Valuation rules 3.11.2 Financingliabilitiesare subsequentlyvalued at amortisedcost using the effective interest rate method. Derecognition 3.11.3 Financing liabilities are derecognisedwhen the obligation specified in the contract is discharged, cancelled or expires. Underwriting operations 3.12 Classification and method 3.12.1 of recognition There are two categories of contract issued by the Group’s insurance companies: insurance policies and financial contracts with discretionary ❯ profit-sharing, which are governed by IFRS 4; financial contractswithout discretionaryprofit-sharing,which are ❯ governed by IAS 39. Insurance policies (a) An insurance policy (or contract) is a contract according to which one party (the insurer) accepts a significant insurance risk of another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.An insurance risk is a risk, other than a financial risk, transferredfrom the policyholderto the issuer. This risk is significantwhen an insuredevent may require an insurer to pay significantadditionalbenefitswhatever the scenario,with the exception of scenarios that lack business significance. The existing accountingpractices for insurance policies subject to IFRS 4 continue to be maintained, with the exception of the equalisation reserves as defined by IFRS 4 which have been annulled, provided that the reserves thus established meet the solvency tests stipulated by international standards (see paragraph 3.12.2.c).

Financial contracts (b) Contracts that do not meet the definition of insurance policy as described above are classified as financial contracts. Financial contracts are broken down into two categories: financial contracts with and without discretionary profit sharing. A discretionary profit-sharing clause is defined as the contractual right held by a subscriber to receive an additional payment or another benefit, the amount or maturity of which is fully or partially at the discretionof the insurer and the valuation of which is based either on the performance of a set of contracts or a determined contract, either on the income or loss of the insurer, a fund, or any other entities having issued the contract or on realised and/or unrealised investment returns of a portfolio of specifiedassets held by the issuer. The accounting methods for financial contracts with discretionary profit sharing are identical to the methods for insurance policies described above. Financial contracts without discretionary profit sharing are treated using the valuation procedures described in paragraph 3.12.3. PREMIUMS Written premiums represent the gross premiums, before reinsurance and tax, net of cancellations, reductions, rebates, of the change in premiums still to be written and of the change in premiums to be cancelled. Premiums written and adjusted for the change in reserves for unearned premiums (which are defined below) constitute earned premiums. INSURANCE POLICY SERVICING EXPENSES Non-life insurance policy servicingexpensesmainly include benefits and expensespaid and the change in reserves for claims and other technical reserves. Benefits and expenses paid relate to the claims settled net of claims receivable collected for the fiscal year and the periodic payment of annuities. They also include the fees and commissions for the management of claims and payment for services. TECHNICAL LIABILITIES RELATING TO NON-LIFE INSURANCE POLICIES Underwriting liabilities relating to non-life insurance policies are generally not discountedwith the exception of liabilities relating to long-termcare risk as well as those relating to current annuities or annuities in the course of establishing incapaciatynd disability risks. Reserves for unearned premiums The technical reserves for unearned premiums represent the portion of premiums for the period between the inventorydate and the next contract payment date. They are calculatedon a pro rata basis. Insurance policies under IFRS 4 3.12.2 Non-life insurance policies (a)

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Universal Registration Document 2020 - GROUPAMA ASSURANCES MUTUELLES