GROUPAMA / 2020 UNIVERSAL REGISTRATION DOCUMENT

7 FINANCIAL STATEMENTS Consolidated financial statements and notes

2.3.1.1 SPECIFIC FEATURES OF CERTAIN NON-LIFE INSURANCE POLICIES

2.3.1.2 SPECIFIC FEATURES OF CERTAIN LIFE INSURANCE POLICIES AND FINANCIAL CONTRACTS (a) Discretionary profit-sharing clause Certain life insurance, savings and retirement products offered by the Group contain a discretionaryprofit-sharingclause. This profit sharing must at least meet regulatory and/or contractual constraints.Commercialconsiderationsmay lead to an increase in such profit-sharing.This increase, the amount of which is left to the insurer’s discretion, gives policyholders a share of the profits generated by insurance company’s financial managementand net underwriting income. (b) Early redemption options Most of the savings and retirement products may be surrendered by the policyholders at a value defined by the policy before maturity. Large redemptions may have significant impact on the results or the solvency in certain unfavourable environments. (c) Specific features of unit-linked policies Most unit-linked policies sold by Groupama do not generally provide for contractual performance. Under these conditions, the policyholder alone directly assumesresponsibilityfor the investment risk. Certain policies may provide for a minimum redemption guarantee in the event of the policyholder’s death. 2.3.1.3 MORTALITY AND LONGEVITY RISK In life insurance,the paymentof benefits is conditional on the death or the survival of the policyholder. It is the occurrence of one or other of these events that gives the right to payment of a benefit. The probability that these events will occur is estimated through experiential or regulatory statistical tables. In most cases, reserves are calculated using the regulatory tables based on statistics of population change. These tables are regularly revised to take demographic changes into account. Income or Group’s equity is potentially exposed to risk if demographic change deviates from experience with regard to these reserving tables. The amount of actuarial reserves for annuities is as follows:

As with other insurers, the income and financial position of Groupamamay be affected quite significantlyby the unanticipated and random occurrence of natural or man-made events, such as floods, drought, landslides, storms, earthquake, riots, fire, explosions,or acts of terrorism.For example, the storm sufferedby France in December 1999 resulted in major damage and a significant increase in compensation claims by Groupama customers. Climate changes that have occurred in recent years, specifically global warming, have contributed to increasing the unpredictablenature and frequency of climate events and natural events in regions where Groupama is active, particularly in Europe, and have created new uncertainty as to Groupama’s future risk trends and exposure. Groupama is implementing a reinsurance programme to limit the losses it is likely to suffer as a result of events or other events affecting its underwriting results. The reinsurance programmes implemented by Groupama transfer a portion of the losses and corresponding expenses to the reinsurers. These programmesare supplementedby the issuanceof a “cat bond” on the high tranche of the force-of-natureprotections.However,as an issuer of policies covered by reinsurancepolicies, Groupama remains committed to all its reinsured risks. Reinsurancepolicies therefore do not relieve Groupama of the obligation to settle claims. The Group remains subject to risks related to the credit situation of reinsurers and its ability to obtain the payments due from them. Moreover, the reinsurance offering, the amounts that may be covered, and the cost of coverage depend upon market conditions and are likely to vary significantly. Other factors in risk growth may be mentioned: ageing of the population (health, long-term care); ❯ increased pollution; ❯ strengthened legal structure (liability – compensation for bodily ❯ injury, etc.).

31.12.2020

31.12.2019

France

International

Total

Total

(in millions of euros)

Actuarial reserves for life annuities

10,419

14

10,433

10,363

Actuarial reserves for non-life annuities

2,356

18

2,373

2,216

TOTAL

12,775

32

12,807

12,578

The share of actuarial reserves for life annuities continued to be largely predominant at the end2o0f 20 (> 80% of annuity commitments).

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Universal Registration Document 2020 - GROUPAMA ASSURANCES MUTUELLES