NATIXIS_REGISTRATION_DOCUMENT_2017

PRESENTATION OF NATIXIS Natixis’ businesses

The activities of Natixis Assurances, which were initially developed for the segment of life insurance policies for retirementsavings, have been expandedto incorporatepersonal and propertyprotectioninsurance.Accordingly,the development of non-life and personal protection insurancewas acceleratedin 2011 with the launch of the ABA (“Bancassureur Ambition”) sales action plan, which was extended in 2014 through the ABAPro plan, aimed at permanently establishing a genuine bancassurance culture. These ambitions gradually made the insurance business one of the core priorities for Groupe BPCE, which seeks to create customer loyalty by offering a range of insurance products in addition to developing commercial relations and generating stable revenues that are not correlated with financialrisks and the bankingbusiness. The Insurance division’s operating environment Since the launch of the 2014-2017plan, the Insurancedivision’s business has evolved in an unprecedented and ever-changing environment. Macroeconomic and financial shifts have resulted in the implementationof monetary policies with significant impacts on life insurance policies for retirement savings, and, to a lesser extent, the non-life insurance business. In particular, historically low interestrates, which are the sourceof over 80%of revenues for life insurance players, have led to significant changes in productand investmentstrategies: life insuranceproductsintroducedsince the plan’s launch have a been aimed at improvingthe sharingof risks and profits among the variousstakeholdersin order to guaranteethe right balance between sustainable sales competitiveness and solvency protection in the medium term. Similarly, the Personal Insurance business line has responded to the sharp decrease of market interest rates by lowering the revaluations incorporatedinto its policies.This has allowed it to accumulate a significant profit-sharingreserve representingover a year of revaluationsat the end of 2017. This reserve can be used as a significant cushion to supplement “policy” revaluations over the next eight years; a variety of commercial initiatives have been undertaken, a targeted at end-customers and the business provider networks,to increasethe share of inflows and assets invested in unit-linkedproducts; the continualdeclinein returnsfrom traditionalfixed-rateassets a has led to a number of changes in asset management policy: the diversificationof fixed-incomeinvestmentstoward more j direct loans and structuressuch as securitizationfunds, an increase in the share of bond issues by corporateentities j to the detriment of governmentbonds, whose returns have becomevery low, the maintenance of a relatively significant “equity bucket”, j while retaininga varietyof managementstrategies. In addition,the insurancebusinessis monitoredvia prudentialand regulatory oversight, a process that has seen significant changes: the Solvency IIDirective came into effect on January 1, 2016, a resulting in changes in organizational structure, operating procedures and the assessment of minimum solvency as required for developed activities. In the current context of historically low interest rates, this change constitutes a major challenge. The division prepared for this challenge by modifyingits governanceand risk managementprocesses; similarly, the entry into force of PRIIPs regulations and the a recent changes in the area of payment protection insurance

(easier early termination) are likely to result in changes to productsand operatingprocedures; finally, the upcoming entry into force of IFRS 9 and IFRS 17 a (January 1,2021) will force the Insurancedivision to modify its financial and technical steering. A project to achieve this was launchedin 2017, upon the publicationof IFRS 17. Finally, the rapid development of digital technology and its application toward the development of new methods of distributionand customerinteractionis a source of opportunities that the Insurance division is closely monitoring. Accordingly, it has pursueda policy aimedat: digitalize its management processes. Thus, the expansion of a the life insurance business into the Caisse d’Epargnenetwork has led to the opening of a new management site that employsentirelydigital processes.The businessline intendsto continue pursuing the digitalization and automation of low-value-added processes in order to become one of the most efficient players in terms of managementcosts relative to assetsundermanagement; adaptingsubscriptionprocessesto incorporatenew digital tools a and alignwith customerbehavior.Already,a significantshareof non-life subscriptions is performed remotely and formalized using an electronicsignature,and preparationshave beenmade in anticipation of rapid evelopment in theseapproaches; continuingto scale down administrativemanagementactivities a in favor of in-branchtransactionsusing applicationsinstalledon work stations and customer-initiatedtransactions through the self-care options gradually being rolled out for the majority of productsand managementoperations; continuing to adapt information systems with the aim of a improving operational efficiency and service quality. For example, the changeover from BPCE Vie’s “Life Insurance Savings” management information system, finalized in 2012, was followed in 2016 by changes to BPCE Assurances’ management information system for property and casualty insurance. An overhaul of BPCE Assurances’ claims compensation information system was launched in 2016 and continuedthroughout2017; outsourcinglow-value-addedoperationsto address changes in a activity or to process specific operations for which adequate in-houseexpertiseis not immediatelyavailable. Natixis Assurances’ strategy is to develop sustainable business activity across its operations by maintaining the right balance between price competitiveness and the preservation of fundamentaltechnicalparameters. Personal insurance In PersonalInsurance,2017was the first full year of sales for the new life and personal protection line on the Caisse d’Epargne network,after being graduallyintroducedin 2016. Total revenue from direct sales climbed to €10.3 billion, a substantial increase (+53% versus 2016) boosted by the Caisse d’Epargnenetwork’ssales of the new range of products.Assets under management were up 14.5% to €54.7 billion. Revenue from the personal protection insurance and payment protection insurance activities grew to €820 million in 2017, up 8% comparedto the previousyear. The year 2017, which was the first full year for the Personal Insurance business line in its newly restructuredform, saw the successfulimplementationof numerousprojects,including:

1

25

Natixis Registration Document 2017