GROUPAMA / 2020 UNIVERSAL REGISTRATION DOCUMENT

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

This monitoring systemalso entails businessreviewsof subsidiaries conducted by the Senior Management of Groupama Assurances Mutuelles with business reviews at least twice per annum . These reviews include a specific “risk” section that presents,by entity, the level of deploymentof the internal control system and the principal work in progress in terms of risk management.

Underwriting and claims management 2.2.2 The underwriting risk management and claim management principles are formalised in the Group Underwritingand Reserving policy approved by the GroupamaAssurancesMutuelles Board of Directors. In particular, it specifies the underwriting rules, limits of cover, and exclusions in accordance with the reassurance agreements by area of insurance. Delegationsof authority for underwritingand claims are defined in all of the Group’s companies. Risks are accepted or refused at every level of delegation, based on underwriting guidelines that include the Group’s underwriting and commercial policies. Underwriting in particular is secured through a cross Managerial control procedure and through integrated controls performed implicitly by the IT system. Claims management procedures are defined on a standard basis throughout the Group and are regularly updated in procedural specifications governing the management of bodily injury and property damage claims. Moreover, the integration of processing within the IT systems of the entities ensures that management actions are performed. Claims management includes a review of claims files starting at an average commitment threshold. The Group’s insurance business is explicitly or implicitly monitored using analytic procedures,such as regular analysis of the results of each entity and monitoring underwritingstatistics and claims rates by entity. The most significant and most complex risks are individually monitored by the specialist business lines and the entities concerned. In addition, these specialist business lines also act to warn and advise the entities. 2.2.3 In accordancewith the practices of the insurance sector and with accounting and regulatory requirements, Groupama recognises technical reserves to cover claims and its non-life and life insurance business lines. Determining technical reserves, however, remains an intrinsically uncertain process, relying on estimates. The application of reserve rules is continually monitored by teams dedicatedto this task, both before and after the fact, in addition to the reviews that are conducted by the locaslupervisory authorities. The rules for establishingreserves for claims and the funding tables for life and non-life incapacity & invalidity annuities are defined within the InsuranceDivisions in guidelines that are harmonisedfor all of the Group’s entities. Reservesare valued by claimsManagers within the operational entities and, if necessary, are supplemented by reserves for losses that have occurred but have not yet been reported. Valuation of reserves

2

Insurance risks

Prudential oversight 2.1 Pursuant to European Directives, Groupama is subject to regulations for covering the solvencymargin, both at the corporate level for each of the insurance companies and at the level of the combined Group.

2.2

Objectives for managing risks resulting from insurance policies and methods to limit these risks

The Group’s insurancebusinessexposes it to risks primarily related to product design, underwriting, claims management, valuation of reserves, and reinsurance. 2.2.1 Most of Groupama’s business lines are subject to strong and increasing competitionfrom other insurancecompanies,combined banking & insuranceoperations,and mutual insurancecompanies. This fierce competitionplaces great pressureon the price of certain Groupama products and services and therefore on its profitability. The InsuranceDivisionsof GroupamaAssurancesMutuellesensure that the product line is in keeping with Group strategy. Life and non-life insurance products are designed by the business units of GroupamaAssurancesMutuellesand GroupamaGan Vie on behalf of the Group’s companies. Product design is the result of market and profitability research performed with actuarial systems to control margins in conjunctionwith the Group ActuarialDepartment and the Investment Department where appropriate. Product launches or changes occur following a standard process incorporating the approval of the deliverables for customers and salespeople by the Group’s Legal, Risk, and Compliance Departments, and are then adapted by division (regional mutuals, subsidiaries in France, International subsidiaries). Throughout the product governance procedure, metrics are built in to take target customers’ interests and characteristics into account. The main steps of this process are ratified in the committees stipulated (Operating Committees, Insurance Risk Committee, Group Executive Committee). In 2017, the product design process was comprehensively reviewed as part of the work done to apply the Insurance Distribution Directive which came into force in 2018. In fact, a product governance policy was produced and approved by the Board of Directors in December 2017. Product design

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Universal Registration Document 2020 - GROUPAMA ASSURANCES MUTUELLES