NATIXIS - Universal registration document and financial report 2019

5 FINANCIAL DATA

Statutory Auditors’ report on the consolidated financial statements

Insurance technical reserves Risk identified and main judgments

Our audit approach We used the actuarial specialists within our firms to assist us in auditing these items. Depending on the type of risks covered by the reserves, the main audit procedures applied included: obtaining an understanding of the general conditions relating V to insurance contracts marketed by the Group; appraising the methods and assumptions used to calculate those V reserves, including their consistency with applicable regulations, market practices and the economic and financial context; testing, on the basis of accounting reconciliation, recurrence tests, V or surveys, the reliability of information relating to insurance contracts recorded in the management systems and used for the valuation of technical reserves; carrying out, based on a sample of policies, an independent V recalculation of certain reserves; assessing calculation methods and the result of the liability V adequacy test, as required under IFRS 4. We also verified the information on insurance liabilities disclosed in the notes to the Group’s consolidated financial statements. Our audit approach We acquired information on how budgetary data is compiled to estimate future taxable profits and assessed the reliability of the process of drawing up the tax business plans that are the basis of our assessment of the probability of the Group recovering its deferred tax assets by: examining how the last business plan used as a basis of the V estimates was developed and approved; comparing projected results of previous years to the actual results V for those years; assessing the reasonableness of the forecast assumptions and V the inputs used by management to estimate future profits and the recoverability of recognized deferred tax assets, based on our experience and knowledge of the Group’s activities and strategy. With the help of our specialists, we verified the appropriateness of the model adopted by management to identify existing tax loss carryforwards to be used, whether through deferred tax liabilities or future taxable profits. Based on projections made by management, we performed tests to check that deferred tax asset bases are properly calculated and that the right tax rates are used.

As part of its insurance business, the Natixis Group recognizes technical reserves that represent its commitments towards policyholders. We considered the valuation of these reserves to be a key audit matter insofar as they represent a significant amount in the Group’s financial statements and since some of these reserves require the exercise of judgment in determining the assumptions (e.g. experience tables and behavioral statistics) or calculation models used. The technical reserves of the insurance contracts amounted to €90,018 million at December 31, 2019. Please refer to Notes 6.23, 9.2.5 and 9.5 to the consolidated financial statements for more details.

Deferred tax assets related to tax loss carryforwards Risk identified and main judgments

The Natixis Group recognizes deferred tax assets at the reporting date in respect of tax loss carryforwards when it is considered likely that the tax entity concerned will have future taxable profits that tax loss carryforwards may be set off against, within a certain time frame. The estimate of the ability to generate future taxable profits within this period requires the exercise of judgment on the part of management, including in developing tax business plans, to justify the recognition of deferred tax assets. We identified this issue as a key audit matter due to the sensitivity of deferred tax assets thus recognized to the assumptions and options adopted by management. At December 31, 2019, €1,388 million was recorded on Natixis’ consolidated balance sheet under deferred tax assets, including €789 million in tax loss carryforwards Please refer to Notes 6.23, 7.10 and 8.8 to the consolidated financial statements for more details.

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019