Groupama // Universal Registration Document 2022

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FINANCIAL STATEMENTS Combined financial statements and notes

2.2

Objectives for managing risks resulting from insurance policies and methods to limit these risks

The key role in verifying Groupama Assurances Mutuelles’ compliance, i.e. the Group Compliance Manager: develops the Group Compliance policy. The Compliance Manager is involved in drafting the Group remuneration policy, governance policy, and product surveillance policy, in conjunction with the relevant Groupama Assurances Mutuelles departments; ❯ coordinating the compliance function generally and the various Compliance Managers by acting, where necessary, as a conduit for legal, regulatory and jurisprudential intelligence prepared by the Group Legal Department; regularly checking the compliance of Group policies, standards, and procedures on the systems within its scope and their effective implementation; ❯ identifying, assessing, supervising and monitoring exposure to businesses’ non ‑ compliance risks (risk map, dashboards, risk sheets, etc.); ❯ assists the business lines in drafting the level 1 control plans to strengthen non ‑ compliance risk management and draws up the corresponding level 2 control plans; ❯ implementing and supervising, in conjunction with all Group businesses, the prevention, identification and management of conflicts of interest; ❯ helping in drawing up replies to supervisory authorities, with the Group Legal Department and relevant departments and entities; ❯ reports on non ‑ compliance risk management to the governance bodies of the Group and the companies. ❯ Each Group entity has Risk Management, Control and Compliance functions. Defining the information systems security policy and its implementation by entities fall under the remit of Groupama Support and Services (G2S) which reports to the Group Operational Risk Management and Permanent Control Department. In addition, the Group Management Control Department is responsible for the ongoing monitoring of results and achievement of the Group’s objectives based on a process of estimated management common to all entities. This monitoring system also entails business reviews of subsidiaries conducted by the Executive Management of Groupama Assurances Mutuelles with business reviews at least twice per annum. These reviews include a specific “risk” section that presents, by entity, the level of deployment of the internal control system and the principal work in progress in terms of risk management.

2.2.1 The Group’s insurance business exposes it to risks primarily related to product design, underwriting, claims management, valuation of reserves, and reinsurance. Product design Most of Groupama’s business lines are subject to strong and increasing competition from other insurance companies, combined banking & insurance operations, and mutual insurance companies. This fierce competition places great pressure on the price of certain Groupama products and services and therefore on its profitability. The Insurance Divisions of Groupama Assurances Mutuelles ensure that the product line is in keeping with Group strategy. Life and non ‑ life insurance products are designed by the business units of Groupama Assurances Mutuelles and Groupama Gan Vie on behalf of the Group’s companies. Product design is the result of market and profitability research performed with actuarial systems to control margins in conjunction with the Group Actuarial Department and the Investment Department where appropriate. Product launches or changes occur following a standard process incorporating the approval of the deliverables for customers and salespeople by the Group’s legal, risk, and Compliance Departments, and are then adapted by division (regional mutuals, subsidiaries in France, international subsidiaries). Throughout the product governance procedure, metrics are built in to take target customers’ interests and characteristics into account. The main steps of this process are ratified in the committees stipulated (Operating Committees, Insurance Risk Committee, Group Executive Committee). 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. In fact, a product governance policy was produced and approved by the Board of Directors in December 2017. 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. In particular, it specifies the underwriting rules, limits of cover, and exclusions in accordance with the reassurance agreements by area of insurance. 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. 2.2.2

2. 2.1

Insurance risks Prudential oversight

Pursuant to European Directives, Groupama is subject to regulations for covering the solvency margin, both at the corporate level for each of the insurance companies and at the level of the combined Group.

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Universal Registration Document 2022 - GROUPAMA ASSURANCES MUTUELLES