Groupama // Universal Registration Document 2022

6

EARNINGS AND FINANCIAL POSITION Management report of the Board of Directors

POST ‑ BALANCE SHEET EVENTS

6.1.3

(f)

Impacts of macroeconomic conditions (inflation, interest rate environment) in measuring underwriting reserves

6.1.3.1

Divestment of insurance businesses in Turkey

(g) Hyperinflation in Turkey The Turkish economy is in a state of hyperinflation under the terms of IAS 29. As such, the financial statements of the Turkish subsidiary have been integrated by applying the provisions of this standard. In view of the material nature of this impact, a global adjustment has been recorded in the Group’s financial statements, affecting only shareholders’ equity and the result. The impact on the Group’s financial statements of the application of this accounting method results in an income effect of -€3 million and a negative impact of -€78 million on consolidated reserves (with an offsetting entry to the foreign exchange adjustment in shareholders’ equity). Outstanding claims reserves reflect the best estimate of liabilities to policyholders. In particular, 2022 resulted in a significant change in macroeconomic conditions that determine the parameters for calculating this estimate (changes in the revaluation indices of certain types of claims, observed increase and highly probable upward trend in the costs of settling claims incurred as at 31 December 2022, taking into account the change in the interest rate environment). These various items can have significant effects depending on the Group’s segments and components, but ultimately resulted in a slightly favourable impact on the Group’s financial statements (+€44 million net of corporate income tax).

On 17 January, the Groupama group entered into an agreement with the Axa group to sell its insurance businesses in Turkey. In a context of hyperinflation, which would have required significant capital injections, Groupama group decided to focus its investments on other European countries and regions where it is already established by supporting its business activities in Bulgaria and Romania, which are experiencing strong growth. It also recently established itself in Croatia and Slovenia, in connection with the partnership established since 2008 with the Hungarian bank OTP. In addition, by selling the Turkish subsidiaries to Axa Mediterranean Holding, Groupama is also seeking to give these structures new development prospects. The completion of the transaction is subject to the usual conditions, including obtaining regulatory approvals, and is expected to take place at the end of the second quarter of 2023. Groupama’s businesses in Turkey are recognised in the Group’s financial statements as at 31 December 2022 in accordance with the provisions of IFRS 5. The capital gain on the divestment of business activities will be recognised in 2023 at the time of the effective transfer of control, which will also trigger, under the provisions of IAS 21 § 48, the externalisation of an unrealised exchange loss (historical translation difference in the Group’s financial statements) valued at -€176 million.

144

Universal Registration Document 2022 - GROUPAMA ASSURANCES MUTUELLES