Groupama // 2021 Universal Registration Document

5 GROUP RISK FACTORS The Group’s main risks

Fluctuations in exchange rates 5.1.1.5 Groupama publishes its combined financial statements in euros. Nevertheless, Groupama is exposed to currency risk. In the first place, through its business activities and international development in regions outside the eurozone. Although the Group does business primarily in eurozone countries, about 15% of its premium income at 31 December 2021 was derived from the business of its international subsidiaries (see Note 34 – Analysis of premium income), and about 7% of premium income was denominated in currencies other than the euro, including the Turkish lira, Romanian leu, Hungarian forint, Tunisian dinar, and Chinese yuan. In addition, holding investment assets in foreign currencies such as the US dollar, the Hungarian forint, and the pound sterling also exposes the Group to changes in the value of these currencies against the euro that have an impact on the Group’s net income and financial position. The currency risk is considered “moderate”. The cycles associated with the non-life insurance business are of varying length. These cycles may involve the occurrence of catastrophic events at an unusual frequency or be impacted by economic conditions. The increasing number of climate events, on a global level, as well as other risks, such as acts of terrorism, explosions, the appearance, and development of pandemics, and the impact of global warming, may have major consequences, not only in terms of their immediate damage and impact, but also in respect of insurers’ current and future activities and income. The potential increase in compensation and claims, the emergence of new kinds of liability, growing uncertainty as to the volume and level of maximum losses may, for example, have a material impact on Groupama’s business activities, consolidated net income and liquidity. Through the diversification of its portfolio, the individual selection of risks accepted, the limitation of its exposure to risks (specifically in respect of natural disasters), the management of overlapping risks and reliance on reinsurance, Groupama significantly reduces the negative impacts of its exposure. Insurance risks are managed in accordance with the principles and rules relating to underwriting and reserves. In particular, these principles and rules specify the cover limits and the exclusions fixed under reinsurance agreements, the monitoring of the appropriateness of the portfolio and the price level, preventive measures such as in the case of adverse climatic risks, the provision of information to insured municipalities and, where appropriate, to policyholders in order to anticipate and address such risks, the rules for managing claims, and the standards on reserves. INSURANCE RISKS 5.1.2

In the Non-Life business activities, the Group’s results are sensitive to rising interest rates if these are combined with persistent inflation leading to higher costs and a recessionary environment leading to a decline in insurance capacity. In this context, in the event of price adjustment difficulties, the Group could see an erosion of its margins. In the current market conditions where, although rates are no longer in negative territory, interest rates remain low, and the risk of them remaining at current levels or falling further cannot be ruled out. The risk is therefore generally considered “significant”. 5.1.1.2 The Group is sensitive to the significant and generalised widening of spreads across all private and sovereign issuers. Such developments could have a significant negative impact on the Group’s solvency. As of 31 December 2021, the regulatory solvency ratio was 271%. However, the vast majority of the Group’s bond portfolio consists of public and private eurozone issues, with AA and A ratings predominating at 68.0%, BBB ratings at 28.3%, and ratings below BBB at 3.7% as of 31 December 2021. Despite the quality of these ratings, given the current context of financial markets and the global environment, the credit risk is considered “significant”. 5.1.1.3 The Group is exposed to the risk of losses on the market value of equities due to fluctuations in financial markets (individual position of assets or reflection of wider market movements). As of 31 December 2021, equities represented 8.7% of the Group’s assets in terms of economic exposure. As of 31 December 2021, a 25% decrease in the value of equities would have had a moderate impact of 14 basis points on the Group’s solvency ratio, while a 25% increase in the value of equities would have resulted in an increase in the Group’s solvency ratio of 4 basis points. As of 31 December 2021, the regulatory solvency ratio was 271%. The Equities risk is considered “moderate”. 5.1.1.4 The Group is exposed to property risk, presented as an insufficient return on assets (lower income and/or realised gains) or a decrease in unrealised capital gains (or an increase in unrealised losses). A decrease in returns could have a moderate impact on net income, and a decrease in unrealised gains (or an increase in unrealised losses) could directly affect the Group’s solvency. As of 31 December 2021, the regulatory solvency ratio was 271%. The Group’s property assets are mainly held by subsidiaries in France. As of 31 December 2021, property assets represented 6.9% of the Group’s portfolio. The property risk is considered “moderate”. Credit risk Equities risk Property risk

111 Universal Registration Document 2021 - GROUPAMA ASSURANCES MUTUELLES