NATIXIS - 2018 Registration document and annual financial report

FINANCIAL DATA Consolidated financial statements and notes

NOTES ON INSURANCE ACTIVITIES

NOTE 9

Consolidation of insurance entities 9.1 Natixis opted to continue applying the provisions set out in IAS 39 for insurance entities (see Note 2.1) . In accordance with ANC recommendation No. 2017-02, Natixis presents its insurance businesses separately on the balance sheet and income statement. The “Insurance business investments” line on the asset side of the balance sheet consists of insurance business assets representative of: Financial investments (i.e. in financial instruments) including a advances to policyholders; Financial investments in unit-linked products; a derivative instruments; a revaluation differences on interest rate risk-hedged portfolios. a Financial investments in securities are classified in the balance sheet under the various categories of investments defined in IAS 39. The other balances related to the insurance business are aggregated with the balances related to the other balance sheet items by type. On the liability side of the balance sheet, the “Liabilities related to insurance policies” line consists of: insurance companies’ technical reserves; a insurance and reinsurance liabilities, including amounts due to a policyholders; derivative instruments held by insurance businesses; a shares of the revaluation on interest rate risk-hedged a portfolios; the deferred profit-sharing liability. a The income statement line item “Net income from insurance activities” mainly covers: premiums written and the change in unearned premium a reserves; investment income including income from investment a properties; investment expenses; a changes in fair value of investments at fair value through profit a or loss, as well as gains and losses on the sale of investments, including investment property; impairment charges and reversals on investments at amortized a cost or at fair value through other comprehensive income; amortization of acquisition costs; a external expenses on policy benefits; a income and expenses net of reinsurance transfers. a

are classified in one of the four categories of financial assets set out below: Financial assets measured at fair value through profit and loss These are instruments held for trading purposes or designated at fair value through profit or loss on initial recognition in accordance with the fair value option amendment to IAS 39 (published by the IASB in June 2005 and adopted by the European Union on November 15, 2005). Securities held for trading purposes are those acquired by Natixis principally to be sold in the near term and those forming part of a portfolio of financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking. Securities valued under this option fall into one of the following three categories: hybrid instruments that contain one or more significant and a separable embedded derivative features; instruments belonging to a group of financial assets valued and a managed on a fair value basis; instruments that present an inconsistency in accounting a treatment with a related financial liability. Held-to-maturity financial assets These are non-derivative financial assets with fixed or determinable payments and fixed maturities that Natixis has the clear intention and ability to hold through to maturity, other than those that are designated on initial recognition as at fair value through profit or loss (fair value option) or available-for-sale, and those that meet the definition of loans and receivables. On initial recognition, available-for-sale financial assets are measured at fair value including transaction costs. After initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method and tested for impairment at each reporting date. Where necessary, an impairment charge is recorded in income under “Provision for credit losses”. Transactions intended to hedge interest rate risk on these securities are not permitted under IFRS. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market, other than those designated as at fair value through profit or loss or available-for-sale. This excludes assets for which the holder cannot recover the majority of the initial investment other than because of a credit deterioration, which should be classified as available-for-sale. When they are hedged, loans and receivables also include the fair value of the hedged component of assets classified in this category (fair value hedges). On initial recognition, loans and receivables are measured at fair value (i.e. face value) plus transaction costs and less any discount and transaction revenues. In the case of loans, transaction costs include fees and any expenses directly attributable to setting up the loan. After initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method and tested for impairment at each reporting date. Where necessary, an impairment charge is recorded in income under “Provision for credit losses”.

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Accounting principles 9.2

9.2.1

Financial assets under IAS 39

At initial recognition, financial assets and liabilities are measured at fair value, corresponding to their acquisition price at that date. Their subsequent accounting treatment depends on their balance sheet classification. In accordance with IAS 39, financial assets

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Natixis Registration Document 2018