UNIVERSAL REGISTRATION DOCUMENT 2023

7 FINANCIAL STATEMENTS Combined financial statements and notes

2.2.2 In 2017, the product design process was comprehensively reviewed as part of the work done to apply the Insurance Distribution Directive, which came into force in 2018. To this end, a product governance policy was produced and approved by the Board of Directors in December 2017. It is reviewed in line with ACPR Recommendation 2023 ‑ R ‑ 01 of 17 July 2023 on the implementation of certain provisions arising from the Insurance Distribution Directive (EU) 2016/97. Underwriting and claims management The underwriting risk management and claim management principles are formalised in the Group Underwriting and Reserving policy approved by the Groupama Assurances Mutuelles Board of Directors. Delegations of authority for underwriting and claims are defined in all of the Group’s companies. Risks are accepted or refused at every level of delegation, based on underwriting guidelines that include the Group’s underwriting and commercial policies. Underwriting in particular is secured through a cross managerial control procedure and through integrated controls performed implicitly by the IT system. Claims management procedures are defined on a standard basis throughout the Group and are regularly updated in procedural specifications governing the management of bodily injury and property damage claims. Moreover, the integration of processing within the IT systems of the entities ensures that management actions are performed. The Group’s insurance business is explicitly or implicitly monitored using analytic procedures, such as regular analysis of the results of each entity and monitoring underwriting statistics and claims rates by entity. The most significant and most complex risks are individually monitored by the specialist business lines and the entities concerned. In addition, these specialist business lines also act to warn and advise the entities. Valuation of provisions In accordance with the practices of the insurance sector and with accounting and regulatory requirements, Groupama recognises underwriting reserves to cover claims and its property and life insurance business lines. Determining underwriting reserves, however, remains an intrinsically uncertain process, relying on estimates. The application of reserve rules is continually monitored by teams dedicated to this task, both before and after the fact, in addition to the reviews that are conducted by the local supervisory authorities. The rules for establishing reserves for claims and the funding tables for life and non ‑ life incapacity & invalidity annuities are defined within the insurance divisions in guidelines that are harmonised for all of the Group’s entities. Reserves are valued by claims Managers within the operational entities and, if necessary, are supplemented by reserves for losses that have occurred but have not yet been reported. 2.2.3

2.2.4 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. Reinsurance 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 Group Reinsurance Security Committee (CSRG), which is composed particularly of the Reinsurance Department of Groupama Assurances Mutuelles and the Risk Management key function, are based on ratings from ratings agencies aim to control reinsurer default risk. 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. 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 contracts and calculate the insurer’s commitments to policyholders. The terms and conditions vary based on the type of contract and the duration of the commitments.

2.3

Terms and conditions of insurance contracts 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 contracts 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 contracts and at business in the form of group contracts.

294

Universal Registration Document 2023 GROUPAMA ASSURANCES MUTUELLES