Groupama // 2021 Universal Registration Document

5 GROUP RISK FACTORS The Group’s main risks

Risk of insufficient reserves 5.1.2.3 The Group is exposed to the risk of insufficient outstanding claims reserves and other technical reserves related to the non-life insurance and non-life health insurance business. The materialisation and magnitude of the risk may be influenced by internal and external factors. The Group establishes reserves in accordance with the applicable accounting and regulatory requirements. However, these reserves do not represent a valuation of the corresponding liabilities, but rather an estimate of the amounts of claims, on a given date, using actuarial projection techniques. Claims reserves may therefore be subject to changes due to the number of variables that affect the ultimate cost of claims. These variables may be varied, such as the intrinsic change in claims, regulatory changes, trends in case law, and variations in the interest rates used to update annuity reserves. These items are not always predictable, as actual losses may differ significantly from the gross reserves initially established. Any upward or downward revaluations may therefore have an impact on net income. Although the likelihood of the risk materialising is greatly reduced at the Group level due to better diversification between the business lines and the entities, the risk of insufficient technical reserves is considered “moderate”. Cyber Insurance risk 5.1.2.4 The Group’s Cyber Insurance risk relates to non-life insurance policies offering cover to meet the need for customer protection in an environment of increased threat and frequency of cyber-attacks. To best manage this risk in its portfolio, in addition to its own expertise, the Group also relies on the expertise of external service providers/counterparties, brokers, and reinsurers. In addition, the reinsurance protection in place would allow the Group to mitigate the potential impact of this risk should it occur. At 31.12.2021, the Cyber Insurance risk is considered “moderate”. Longevity 5.1.2.5 The Group is exposed to the risk of an increase in the duration of payment of annuities, due to an increase in the life expectancy of annuitants or future annuitants, and therefore to an increase in the actuarial reserves to be established, which has a direct impact on the underwriting income from annuity insurance products. Changes to the regulatory table used also have a moderate impact on the increase in annuity reserves. The life expectancy risk is considered “moderate”.

Despite the careful attention paid to the monitoring of these risks and the risk control systems put into place, Groupama, because of its historical customer base and inflation of catastrophic events related to global warming, might experience major losses in the future on such risks, which would have a substantial negative impact on its financial position and net income. The Group’s main insurance risks are presented below in descending order. 5.1.2.1 As one of the leading agricultural risk insurers on the French market, the Group is exposed to the risk of occurrence of major cumulative climate events affecting the insured crops (mainly hailstorms, floods, or droughts). The Group, whose main expertise is agricultural insurance, insures all types of crops throughout France through its regional mutuals and also offers its expertise internationally (Romania, and China). As of 31 December 2021, the areas covered by multi-risk climate insurance in France were divided among the following crops: large crops (wheat, maize, rapeseed, etc.): 93.86%; ❯ Climate risk on crops If this risk were to materialise, a technical loss may have a direct impact on the Group’s net income. However, it is mitigated by risk management measures and the effectiveness of reinsurance covers. The adopted external reinsurance scheme is based on stop-loss retention cover, supplemented by a quota share agreement. The climate risk on crops is considered “moderate” given the effectiveness of the reinsurance arrangements in place. Storm risk 5.1.2.2 The Group is exposed to the risk of storms causing direct or indirect damage to insured property over a very short period. If this risk were to materialise, it may have a significant impact on the Group’s income. The Group’s reinsurance programme enables it to reduce this impact. For example, in 2017, the exceptional climate-related claim associated with storms Irma and Maria in the Caribbean had a limited impact on the Group’s income: while the gross impact of these events totalled 330 million euros, the actual impact on the Group after reinsurance was 38 million euros in the financial statements at the end of December 2017. The Storm risk is considered “moderate” given the effectiveness of the reinsurance arrangements. viticulture: 3.81%; ❯ vegetables: 1.75%; ❯ grassland: 0.54%; ❯ arboriculture: 0.04%. ❯

112 Universal Registration Document 2021 - GROUPAMA ASSURANCES MUTUELLES