Groupama // 2021 Universal Registration Document

7 FINANCIAL STATEMENTS Combined financial statements and notes

The calculation of underwriting reserves in life insurance is also based on the use of an interest rate known as the “underwriting interest rate”, the conditions of which are fixed in France by French Insurance Code. The Code determines a maximum level by reference to the average rate for government borrowings (the “TME”), which is used to set rates for policies and calculate the insurer’s commitments to policyholders. The terms and conditions vary based on the type of policy and the duration of the commitments. The standards for calculating reserves as well as the principles of measuring and controlling related reserve risks are specified in the Group underwriting and reserving policies.

The breakdown of underwriting reserves for life and non-life insurance policies is presented in Note 26.1 to the annual financial statements. BREAKDOWN OF ACTUARIAL RESERVES ACCORDING TO THE CRITERIA OF COMMITMENTS AT FIXED RATE, VARIABLE RATE, OR ABSENCE OF RATE COMMITMENTS The breakdown of actuarial reserves based on fixed-rate, variable-rate ( i.e. tied to a market rate) or no rate commitments was as follows:

31.12.2021

31.12.2020

France

International

Total

Total

(in millions of euros)

Commitments guaranteed at fixed rate

34,175

2,782 36,957

37,574

Commitments guaranteed at variable rate

8,025

18

8,044

8,059

Unit-linked and other products without rate commitment

12,882

1,078 13,960

12,151

TOTAL

55,082

3,879 58,960

57,784

The strong inflow in 2021 on unit-linked products accelerated the growth of these commitments. The share of unit-linked and other products without rate represented 23.7% of total commitments (compared with 21.0% at the end of 2020). 2.2.4 Reinsurance is organised on two levels. Internal Reinsurance operated by Groupama Assurances Mutuelles for all Group entities is designed to optimise retentions for each entity. External reinsurance defines the optimum reinsurance structure for the Group and the level of risk coverage on the bases of computer models. External reinsurance contracts are renegotiated and renewed each year by Groupama Assurances Mutuelles on behalf of the entire Group. Moreover, selection rules defined in the Reinsurance Securities Committee, which is composed particularly of the Reinsurance Department of Groupama Assurances Mutuelles and the Group Risk Department, which are based on ratings from ratings agencies, are designed to Manager reinsurers’ risk of default. The list of reinsurers is reviewed in its entirety at least twice a year. During the year, continual monitoring is performed to adapt the internal ratings of the reinsurers to changes that may occur to them that would modify their solvency assessment. Approved reinsurers must have a rating compatible with the type of business reinsured, depending on whether they have a short or long accounting run-off. The reinsurance principles and arrangements are described in the Group reinsurance policy. Reinsurance

Terms and conditions of insurance policies having a material impact on the amount, maturities, and uncertainty of the insurer’s future cash flows General description 2.3.1 The Group offers a broad range of non-life insurance products designed for individuals, local authorities and businesses. The motor, individual, professional and agricultural property damage policies offered by the Group are generally one-year contracts with tacit renewal, which include third-party liability coverage. The Group offers a full range of life insurance products, aimed at consumers individually as individual policies and at business in the form of group policies. The main individual insurance policies in euros offered to our clients are savings policies, term life policies, mixed insurance policies, deferred annuity policies with mandatory withdrawal in annuities, and deferred capital contracts with return of premiums. The group policies offered by the Group are essentially defined contribution pension plans and pension contracts by collective capitalisation in points with a point value. The Group also sells multi-vehicle policies with a euro-denominated investments component and one or more unit-linked components. 2.3

245

Universal Registration Document 2021 - GROUPAMA ASSURANCES MUTUELLES