UNIVERSAL REGISTRATION DOCUMENT 2023

7 FINANCIAL STATEMENTS Combined financial statements and notes

In Non ‑ Life insurance (property and casualty insurance, health and individual protection), the estimation techniques used to value insurance contracts are based on various actuarial projection models reflecting the key characteristics of the portfolios (in terms of risk, underwriting policy, and claims) as well as the quality, relevance, and consistency over time of the available statistical data. In Savings and Retirement, the estimation techniques used to value insurance contracts are based on projections of the key components of the statutory financial statements (income and expenses relating to policyholders, profit ‑ sharing obligations, and investments representing these commitments). The main assumptions that could lead to material changes in the estimation of future cash flows of these contracts relate to policyholder behaviour (due to terminations and surrenders), management decisions concerning profit ‑ sharing percentages and credited rates, as well as general expenses. More specifically, the assumptions made regarding the discount rate, the confidence level for the risk adjustment for non ‑ financial risk, and the contractual service margin recognition profile of direct participation contracts are explained in the following paragraphs. (a) Definition and classification An insurance contract is a contract under which one party – the insurer – accepts a significant insurance risk from another party – the policyholder by agreeing to compensate the policyholder if a specified uncertain future event – the insured event – adversely affects the policyholder. An insurance risk is a risk, other than a financial risk, transferred from the policyholder to the issuer. This risk is significant when an insured event may require an insurer to pay significant additional benefits whatever the scenario, with the exception of scenarios that lack business significance. All substantial rights and obligations (including those arising from legal or regulatory provisions) of the contract are taken into consideration when a significant insurance risk is transferred. In essence, the services provided to the policyholder under the insurance contract include the insurance cover and, where applicable, an investment return service, corresponding to the generation of an investment return for the policyholder who has taken out an insurance contract without direct participation features, and an investment ‑ related service, corresponding to the management of the underlying assets on behalf of the policyholder who has taken out an insurance contract with direct participation features. INSURANCE CONTRACTS WITH DIRECT PARTICIPATION FEATURES An insurance contract may be qualified as a contract with direct participation features if it meets the following conditions of the standard: the contractual terms provide that the holder is entitled to a defined portion of a clearly identified set of underlying items (“pool”); ❯ the entity expects to pay to the holder an amount corresponding to a substantial portion of the income generated by these items; ❯ a substantial portion of the cash flows that the entity expects to pay to the holder must vary with the cash flows of the underlying items. ❯

In addition to the transfer of significant insurance risk to the issuer, an insurance contract with direct participation features is substantially based on the provision of an investment ‑ related service whereby an entity promises a return on underlying items (the link must be enforceable), as well as a contractually specified participation. The nature of the underlying items depends mainly on local regulations and product characteristics. It may result from contractual, legal, or regulatory provisions or the business practices of the entity. INSURANCE CONTRACTS WITHOUT DIRECT PARTICIPATION FEATURES An insurance contract without direct participation is an insurance contract that is not an insurance contract with direct participation features, namely: an insurance contract with indirect participation features (indirect participation contract) because the payment to policyholders depends on the return obtained on the fair value of the underlying items, but without meeting the criteria defined for insurance contracts with direct participation features; or ❯ an insurance contract without any participation features (non ‑ participation contract) because the payment to policyholders does not depend on the return obtained on the fair value of the underlying items. ❯ Financial contracts with discretionary participation features belong to the scope covered by IFRS 17 if they are established by an entity also establishing insurance contracts. They are defined by IFRS 17 as a financial instrument that provides a particular investor with the contractual right to receive, as a supplement to an amount not subject to the discretion of the issuer, additional amounts that have the following features: they are expected to be a significant portion of the total contractual benefits; ❯ the timing or amount of which are contractually at the discretion of the issuer; ❯ they are contractually based on one of the following: ❯ the returns on a specified pool of contracts or a specified type of contract, ■ realised and/or unrealised investment returns on a specified pool of assets held by the issuer, ■ the profit or loss of the entity or fund that issues the contract. ■ (b) Separation of non ‑ insurance components To the extent that the legal form of contracts is presumed to correctly reflect their economic substance, an insurance contract should not, in principle, be separated into multiple components. However, an insurance contract may contain multiple non ‑ insurance components that, under certain conditions, must be valued separately from the host contract. These are: separate embedded derivatives, to the extent that they meet certain criteria; ❯ FINANCIAL CONTRACTS WITH DISCRETIONARY PARTICIPATION FEATURES

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Universal Registration Document 2023 GROUPAMA ASSURANCES MUTUELLES