UNIVERSAL REGISTRATION DOCUMENT 2023

7 FINANCIAL STATEMENTS

Report of the statutory Auditors on the combined financial statements

Measurement of liabilities for claims incurred on insurance contracts valued using the premium allocation model (See notes 3.12.1 and 19.3 to the combined financial statements)

Answers provided by the joint statutory auditors during the audit In order to cover the risk of the valuation of liabilities for claims incurred relating to insurance contracts valued using the PAA model, we have implemented the following audit approach with our actuarial specialists: we assessed the methodology used to measure the cash flows and RA associated with these contracts and their compliance with the applicable accounting standards; ❯ we assessed the design and tested the operating effectiveness of the controls we considered key to our audit; relating to ❯ claims management and, in particular, the valuation of these liabilities, ● information systems used to process technical data and feed it into the accounts, ● documentation and controls relating to key judgements and assumptions made by management; ● we tested, on a sample basis, the reliability of the data on which the estimates are based; ❯ we have carried out analytical procedures, such as monitoring changes in claims ratios, on significant changes during the year; ❯ we have reviewed the outcome of accounting estimates made in previous years in order to assess the reliability of the process used by management to determine these estimates; ❯ our work also involved examining the relevance of the statistical methods and actuarial parameters used, as well as the assumptions made; ❯ for certain categories of insurance risk, we have carried out an independent assessment or a contradictory review of the assumptions used to calculate liabilities. ❯ Finally, we assessed the appropriateness of the information disclosed in the notes to the combined financial statements.

Key point of our audit

At 31 December 2023, the Group recognised liabilities for claims incurred on insurance contracts valued using the premium allocation model (PAA) for a net book value of €17,443 million, as presented in note 19.3.2 to the combined financial statements. As indicated in note 3.12.1 to the combined financial statements, these liabilities consist of the present value of future cash flows and the adjustment for non ‑ financial risks (RA). The determination of these liabilities is based on significant judgements concerning the data used and assumptions relating to future periods, and results from estimation techniques. The estimate of the present value of future cash flows relating to these contracts is based on significant judgements, as set out in note 3.12.1 to the combined financial statements, to define: ❯ estimating future cash flows for groups of contracts, using actuarial projection models reflecting the key characteristics of the contracts, based on historical data and expert judgement. For certain insurance contracts, these estimates include a significant element of judgement, and the choice of assumptions may have an impact on the ultimate cost of claims at the year ‑ end given the greater degree of inherent uncertainty. This is particularly the case for property and casualty classes of business that are long ‑ tail, such as civil and professional liability, workers’ compensation, and other specialty lines of insurance, ● current financial assumptions, in particular the determination of the discount rate curve. ● The assessment of the RA is based on assumptions concerning the level of confidence retained by the Group with regard to the risk factors associated with the technical provisions, and on a value ‑ at ‑ risk type approach, which is the maximum loss within the defined confidence level. ❯ Due to the uncertainties inherent in some of the factors taken into account in making estimates, we considered that the valuation of liabilities for claims incurred in respect of insurance contracts valued using the PAA model constituted a key point in the audit.

313

Document d’Enregistrement Universel 2023 GROUPAMA ASSURANCES MUTUELLES