Groupama // 2021 Universal Registration Document

7 FINANCIAL STATEMENTS Combined 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 discretionary profit-sharing clause. This profit sharing must at least meet regulatory and/or contractual constraints. Commercial considerations may 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 management and 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 assumes responsibility for 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 payment of 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.

As with other insurers, the income and financial position of Groupama may be affected quite significantly by the unanticipated and random occurrence of natural or man-made disasters, such as floods, drought, landslides, storms, earthquake, riots, fire, explosions, or acts of terrorism. For example, the storm suffered in 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 unpredictable nature 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 programmes are supplemented by the issuance of a “cat bond” on the high tranche of the force-of-nature protections. However, as an issuer of policies covered by reinsurance policies, Groupama remains committed to all its reinsured risks. Reinsurance policies 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 case law (liability – compensation for bodily ❯ injury, etc.).

The amount of actuarial reserves for annuities is as follows:

31.12.2021

31.12.2020

France International

Total

Total

(in millions of euros)

Actuarial reserves for life annuities

10,386

16

10,401

10,433

Actuarial reserves for non-life annuities

2,669

18

2,688

2,651

TOTAL

13,055

34

13,089

13,084

The share of actuarial reserves for life annuities continued to be largely predominant at the end of 2021 (79.5% of annuity commitments).

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Universal Registration Document 2021 - GROUPAMA ASSURANCES MUTUELLES