GROUPAMA / 2020 UNIVERSAL REGISTRATION DOCUMENT

7 FINANCIAL STATEMENTS Annual financial statements and notes

The recoverable amount is determined based on a multi-criteria approach that dependson the nature of the assets and the holding strategy. In the event of long-term impairment of a security covered by Article R. 343-10of the French InsuranceCode, the amount of the impairment is the difference between historical cost price and recoverable amount. EQUITY SECURITIES The valuation of equity shares is based on multi-criteriamethods selected based on each specific situation (type of assets, holding period, etc.). The net book value of the equity securities of Groupama Holding Filiales et Participations (GHFP) amounts to €7,228 million. The valuation method applied to these securities is based on the intrinsic valuationof the securitiesof subsidiariesand participations that make up GHFP’s assets. Each entity that undergoes a valuation provides its underwriting income forecasts calculated based on an estimated increase in premium income and a change in combined ratio for the plan period. These assumptions are adapted on the basis of the objectivesof each entity, past experience,and external constraints imposed by the local market (competition, regulation, market shares, etc.). Forecasts of financial income and discounted free cash flow are determined on the basis of financial assumptions (notably discount rate and rate of return). As a general rule, the applied available future cash flows correspond: during an explicit period corresponding to the first years, the ❯ cash flow column is based in particularon the first three years of the Group’s operational strategy planning. This is subject to a discussion process between local management and the Group; beyond the explicit horizon, the cash flow column is completed ❯ by a terminal value. This terminal value is based on long-term growth assumptions applied to an updated projection of normative cash flows; the solvencymargin integrated into the business plans is valued ❯ according to the prudential rules established by the Solvency 2 Directive for subsidiaries whose country is subject to this regulation.For the other entities, the solvencymargin is assessed according to the applicable local regulations. A reserve for impairmentis establishedwhen the value in use at the inventory date obtained through the valuation methods described above is less than the entry cost of those securities. LOANS When the estimateof the recoverablevalue of a loan at inventory is less than its gross value increased, if applicable, by the accrued interest not yet due at the close, a reserve for amortisationwill be created in the amount of the difference.

Reserves 3.2.2 Amortisable securities under Article R. 343-9 (a) of the French Insurance Code Any unrealised capital losses resulting from comparing the book value, including the differences between the redemption prices (premium, discount), with the redemptionvalue, do not necessarily carry a reserve for diminution in value. Nevertheless,a reserve for impairment is allocated when there is reason to believe that the debtor will not be able to honour his commitments, either to pay interest or to repay the principal. Real estate investments, variable-income (b) or fixed-income securities falling under Article R. 343-10 of the French Insurance Code, loans REAL-ESTATE INVESTMENTS When the net carryingamount of buildings,equity shares, or shares in unlistedpropertyor real estate companiesexceeds the realisable value of these investments,a reserve for long-termimpairmentmay be allocated. This impairment is applied on investment properties after a materiality threshold has been taken into account. It is also applied to operating properties provided that their value in use is more than 15% less than the net book value. LISTED SECURITIES (except equity interests) For those investments covered by Article R. 343-10of the French Insurance Code, a line-by-line reserve for impairmentmay only be allocated when there is reason to deem that the impairment is long-term. In accordance with Article 123-7 of ANC regulation 2015-11, long-term impairments of amortisable securities covered by Article R. 343-10of the French InsuranceCode that the Company can and intends to hold until maturityare analysedin terms of credit risk only. A reserve for long-term impairment is established in the event of a proven credit risk, when there is reason to believe that the counterpartywill not be able to honour his commitments,either to pay interest or to repay the principal. For amortisable securities covered by Article R. 343-10 of the French Insurance Code that the Company does not have the intention or ability to hold until maturity, long-term impairmentsare establishedby analysingall of the risks identifiedon this investment based on the considered holding horizon. The long-termimpairmentof an investmentline can be presumedin the following cases: there was a long-term reserve on this investment line in the ❯ previous published statement; the listed investment has consistently shown a significant ❯ unrecognised loss from its book value over a period of six consecutive months prior to closing; there are objective indicators of long-term impairment. ❯

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Universal Registration Document 2020 - GROUPAMA ASSURANCES MUTUELLES