UNIVERSAL REGISTRATION DOCUMENT 2023

7 FINANCIAL STATEMENTS Combined financial statements and notes

The examination of whether there is a component in an insurance contract and the analysis of its separate or non ‑ separate nature are carried out at the time of initial recognition of the contract. After this separation, IFRS 17 is applied to all remaining components of the host insurance contract. All these remaining components, including embedded derivatives and investment components that have not been separated from the host contract, are essentially considered to be a single insurance contract. (c) Level of aggregation The level of aggregation is the basis for assessing contracts and measuring their profitability. Portfolios of insurance contracts are initially identified, each of them comprising only contracts managed together and subject to similar risks: separate investment components ( i.e. amount that the insurer must reimburse to the policyholder in all circumstances); ❯ separate service components, such as the obligation to provide a non ‑ insurance service or product. ❯ the way contracts are managed is based on the nature of the service provided to the policyholder ( e.g. savings, personal protection, health, automobile, and home) taking into account various factors (strategic decisions, organisation of activities, and granularity of financial information); ❯ similar risks result from those predominant in insurance contracts (mortality, longevity, incapacity, disability, civil liability, motor damage, property damage, construction, etc.). ❯ Portfolios of contracts that are not participation contracts are then divided into annual cohorts, as IFRS 17 prohibits the inclusion of contracts issued more than one year apart in the same group. With regard to portfolios of participation contracts, Groupama has opted for the exemption offered in IFRS 17 adopted by the European Union from applying the annual cohort requirement to portfolios of participation contracts based on intergenerational pooling. The portfolios of contracts thus obtained are then distinguished by their profitability, with separate groups for onerous contracts at the time of their initial recognition. A group of insurance contracts should not be reconsidered after initial recognition. (d) Initial recognition Issued groups of insurance contracts are recognised from the earliest of the following: the beginning of the coverage period of the group of contracts, which is the general case; ❯ the date when the first payment from a policyholder in the group becomes due; and ❯ for a group of onerous contracts, the date when the group becomes onerous. ❯

(e) Valuation models for groups of contracts The entity must associate each group of contracts with a valuation model. These models are: the Building Block Approach (BBA), also known as the “general model”, which is the default valuation model (cf. 3.12.1.(f)); ❯ the Premium Allocation Approach (PAA), which is a simplified measurement model for short ‑ term coverage contracts, applicable only under certain conditions (cf. 3.12.1.(g)); ❯ the Variable Fee Approach (VFA), which is the model to be used for the measurement of direct participation contracts (cf. 3.12.1.(h)). ❯ The classification of contracts by valuation model presented below is done only at initial recognition, based on the contractual terms and the economic environment at that date and cannot be revised at a later date except in the case of a Insurance contracts are valued, by default, using a general model known as the Building Block Approach (BBA), including: fulfilment cash flows (“FCF”), which include: ❯ probability ‑ weighted estimates of future cash flows, ■ an adjustment to reflect the time value of money ( i.e. , discounting of these future cash flows) and the financial risks associated with the future cash flows, ■ a non ‑ financial risk adjustment; ■ the contractual service margin (“CSM”), which is initially calculated as the difference between the premium paid by the policyholder and the expected FCF and corresponds to the present value of the expected future profits. ❯ Within the Group, the BBA is applied mainly to protection insurance contracts and to inward reinsurance contracts with a long run ‑ off (including reinsurance of savings contracts with direct participation features). The Group has adopted a year ‑ to ‑ date approach, which consists in changing the treatment of accounting estimates made in its previous interim financial statements ( i.e. , 30 June). Estimates of future cash flows Once a contract within the scope of IFRS 17 meets the criteria for recognition of the contract, it is necessary to determine the “contract boundary” (or contract scope), which includes all the cash flows of the existing contract that must be projected and included in the valuation of the corresponding liabilities (and assets where applicable) (mainly flows of premiums, benefits, and expenses attributable to the performance of insurance contracts). contractual amendment. (f) BBA general model

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Document d’Enregistrement Universel 2023 GROUPAMA ASSURANCES MUTUELLES