UNIVERSAL REGISTRATION DOCUMENT 2023

6 EARNINGS AND FINANCIAL POSITION Management report of the Board of Directors

31.12.2023

31.12.2022

Insurance - France

Insurance - France

(in millions of euros)

P&C

H/P

S/P

P&C

H/P

S/P

Financial and other income Recurring financial margin

366

223

171

(29)

468

235

150

83

Other items

(263)

(101)

(87)

(76)

(315)

(130)

(97)

(88)

ECONOMIC OPERATING INCOME

301

(94)

234

162

544

186

196

162

Capital gains realised net of tax

1

0

1

9

4

5

Impairment charge net of tax

(13)

(9)

(4)

(56)

(13)

(43)

Changes in fair value net of tax

(217)

(100)

(117)

88

41

47

Income from ordinary activities net of tax

(12)

(7)

0

(4)

(14)

(10)

(3)

0

Financing expenses net of tax Net income from discontinued business activities NET INCOME

61

(212)

114

158

572

208

203

162

The BBA underwriting margin for Property and casualty insurance and Health and protection insurance activities totalled -€20 million, i.e. a decrease of -€17 million compared with last year (mostly because of Long ‑ term care portfolios at the regional mutuals and Borrower policies at Groupama Gan Vie). Savings/pensions The net underwriting margin of business accounted for using the VFA model amounted to €221 million in 2023 (a decrease of €62 million over the period). As described above, this decline in France is mainly due to a market effect linked to the change in the yield curve at the end of 2023, which had the adverse effect of releasing the CSM (contractual service margin) under the “bow wave” (a mechanism that corrects a distortion of the emergence of Savings/pension margins due to the time effect in the models). This effect, which resulted in a favourable correction of financial performance in 2022 worth €64 million, did not result in a correction of 2023 financial performance and therefore had no effect on 2023 profit. Adjusted for this effect, the level of CSM release and the associated risk (AR) margin is comparable to last year, i.e. €278 million in 2023 (compared with €279 million in 2022). The VFA business results also reflect experience variance income of €38 million (compared with €26 million in 2022). Other non ‑ attributable expenses amounted to -€94 million over the period versus -€85 million in 2022. The underwriting margin on policies recorded using the BBA accounting model for the Savings/pensions business line corresponds mainly to the Prefon contract and turned in a loss of €45 million over the period. This drop in the underwriting margin was nevertheless fully offset by an increase in the financial margin, ultimately resulting in a slightly lower level of contribution to economic operating income compared to last year. In France, the recurring financial margin (before tax) amounted to €468 million in 2023, up €102 million over the period. the operating expense ratio was stable at 26.5% in 2023 (despite inflationary pressure that weighed on wages, logistics and IT services). ❯

The combined ratio in Property and casualty insurance in France improved by -5.2 points to 97.8% in 2023, and by -0.9 points to 95.6% in 2023 in Health and protection. The net combined ratio for the PAA model (Property and Casualty insurance and Health/Protection) was 96.9% in 2023, compared with 100.3% in 2022 (-3.4 points). This change resulted from several factors in 2023: the effect of claims discounting, which led to a 2.1 ‑ point improvement in the combined ratio under the influence of the increase in rate curves; ❯ a current weather loss experience net of reinsurance, which accounted for 7.2 points of insurance revenue in 2023 ( versus 6.9 points in 2022), reflecting an additional net retention of €84 million compared with last year. It is characterised as follows: ❯ a gross cost of €1,131 million in weather ‑ related claims ( versus €1,484 million in 2022), ■ less coverage by reinsurance protections than in the previous year, totalling €324 million, i.e. , 42% of the amount of external coverage last year, which was €760 million. This change accounts for 3.9 points of the combined ratio; ■ a minor increase in the cost of serious claims (+0.6 point) compared to last year. Most of that increase (around 0.4 point) can be explained by the effect of the riots in France in June and July; ❯ a 1.1 ‑ point improvement in the attritional loss experience to 62.2%. This change conveys the emphasis placed on preserving margins in a context marked by inflation and a need for increased risk selection. This observation can be made for both the network of regional mutuals and the Gan Assurance network; ❯ changes on previous fiscal years, which improved significantly by 1.8 points compared to last year. This is partly due to the year 2022, which was affected by inflation on pending claims, and partly due to a very good rate of claims settlement in 2023 (approximately one point of the loss ratio), thanks in particular to the efforts of the management teams. It should be noted that, net of reinsurance, the weight of the change in the previous weather loss experience remained stable; ❯

186

Universal Registration Document 2023 GROUPAMA ASSURANCES MUTUELLES