Contents. Annual Report

Transcription

1 2005 Annual Report Contents OVERVIEW OF ACTIVITIES PROFILE 1 MESSAGE FROM J.L. BAUCHEREL 2 MESSAGE FROM J. AZÉMA 4 STRATEGY AND OUTLOOK 6 MUTUAL INSURANCE AND GOVERNANCE 8 OUR ORGANISATION 10 OUR GOVERNANCE 12 KEY FIGURES 18 THE FORCES DRIVING OUR SUCCESS 26 PRINCIPLES OF MUTUAL INSURANCE 28 HUMAN RESOURCES 30 INFORMATION TECHNOLOGY 36 THE NETWORKS 39 OUR ACTIVITIES 44 INSURANCE, BANKING AND SERVICES IN FRANCE 46 INTERNATIONAL INSURANCE 70 FINANCIAL SERVICES 78 SOCIAL RESPONSIBILITY 86 PREVENTING RISKS TO PROTECT THE GROUP S PERFORMANCE 88 PREVENTING SAFETY RISKS TO INDIVIDUALS AND PROPERTY 91 FOUNDATIONS AND PATRONAGE 95 SPONSORSHIP 98 GROUP ADDRESSES 99

2 Our Activities Insurance, banking and services in France With its diversified, localised distribution networks, Groupama provides its members and clients individuals, professionals, institutions and businesses offerings that combine insurance, services, and banking products. As the foremost non-life insurer in France, Groupama is also present in the top tier of life and health insurance providers. Breakdown of premium income 52% Life and health insurance International activities Groupama is active in 8 countries, primarily in Europe. The Group is focussing its growth in businesses where it already has recognised expertise in France, particularly services for individuals, agriculture, professionals, and small and medium size businesses. Breakdown of premium income 31% Life and health insurance Financial activities Groupama depends upon a network of specialised asset management companies for its investment management. With its strong expertise in this area, the Group s goal is to build its asset management services for third parties. Lines group banking and estate agency asset management real estate management private equity t t t t Group structure Members Local Mutuals Regional Mutuals Holding Groupama S.A. Subsidiaries Reinsurance link Capital link Membership Fédération nationale Groupama 48% Property and liability insurance 2 brands 5 networks Regional Mutuals 69% Property and liability insurance Breakdown of premium income by country 6.2% Portugal 27.3% Italy 2.1% Hungary 3.6% Gan Outre-mer 25.3% United Kingdom Assets under management 3.4 billion Real estate 68.6 billion Securities 0.7 billion Unlisted securities Stronger profitability and solid financial position (Group financial accounts) 13.5 billion in premium income +4.8% Gan Assurances Gan Eurocourtage Gan Patrimoine Gan Prévoyance 11,237 million contribution to premium income of the Group 519 million contribution to net income of the Group 8,546 million contribution to premium income of Groupama S.A. 373 million contribution to net income of Groupama S.A. 35.5% Spain 2,049 million contribution to premium income of the Group and Groupama S.A. 118 million contribution to net income of the Group and Groupama S.A. 70% premium income in southern Europe 2,800 salaried employees 166 million contribution to premium income of the Group and Groupama S.A. 26 million contribution to net income of the Group and Groupama S.A billion assets under management 6.5 billion net assets +31.4% 544 million net income +34.0% 14.4% return on net assets (excluding fair value effect) 291% European solvency margin 10.3 billion unrealised capital gains +54.7%

3 Profile of Groupama What we are A mutual insurance Group We are a multi-line insurance Group belonging to a large mutual organisation with its foundations in agriculture. Groupama is an independent group, founded by farmers at the end of the nineteenth century. The expertise developed by the Group through its history has benefited all socio-economic parties, including individuals, professionals, businesses and local authorities. Today, Groupama is a major player in the French insurance market: it is the largest insurance mutual and the third largest multi-line insurer in France. Underpinned by long term guiding principles With leaders elected by policyholders and with employees, the Group s mutual organisation and governance remain faithful to the mutualist spirit and its fundamental business principles local presence, responsibility and solidarity. These principles represent the historic values that underlie the Group s development. A local presence Groupama has a dense, well-coordinated distribution network throughout France: there are 7,200 salaried salespeople in Groupama s Regional Mutuals, 1,000 general agents and 330 representatives in Gan Assurances, 1,500 regular partner brokers from Gan Eurocourtage, a network of 600 agents in Gan Patrimoine, and a network of 1,200 salaried employees in Gan Prévoyance. A dynamic international presence The Group has a presence in those areas showing strong potential. Most of its locations are in southern Europe. It also has a presence in central Europe and Asia. (Groupama S.A. consolidated accounts) 10.8 billion in premium income +6.0% 4.4 billion net assets +40.9% 394 million net income +25.1% 19.2% return on net assets (excluding fair value effect) 9.5 billion unrealised capital gains +55.6% (Group perimeter) 32,200 staff, 29,400 of whom are salaried 8 million Groupama members and Gan clients Groupama 2005 Annual Report I 1

4 Messages from the chairman and the CEO Questions for Jean-Luc Baucherel, Chairman of Groupama Why are we talking about a new stage in the Group s development? On 19 December 2001, the Group s Board of Directors asked General Management to prepare the Group to be in a position to open up its capital to outside investors in the timeframe. Over the 4 years since 2002, the Group has carried out many important transformations, most significantly regrouping the Regional Mutuals, simplifying its organisation at the national level, and establishing a new corporate governance structure, while exceeding the profitability goals we had set. All the conditions were fulfilled by the date of the Annual Meeting on 24 February 2006 for the Groupama National Federation, which represents all the Regional Mutuals, to authorise the opening of Groupama S.A. s share capital if required for the Group s future growth. This plan was the subject of extensive prior discussions throughout the Regional Mutual network; this debate was very much in the tradition of our cooperative spirit. All the Mutuals backed this directive. It is vital that Groupama has all the resources required to attain the goal it has set for itself: to become a major player in European insurance and finance. Opening up our capital is a tool for growth, a financial tactic for success. Groupama is a century old insurance group. The key to its success has always been its financial performance and its ability to adapt. So this new stage is just a natural next step in the Group s development. Each generation of the group s directors has been dedicated to handing down an effective organisation, well positioned for growth, structured to provide the best service at the best price to its policy holders. That is our mission. Why has Groupama chosen this growth strategy? The Group s size assures its continuity and independence over the long term. In an increasingly competitive market with more and more complex risks, the Group s size allows it to control its costs, deploy major resources for investments, diversify its risks and be a leader in the insurance market. Opening our capital is another mean for pursuing growth, and it will be used primarily to speed up acquisitions. Groupama has a solid financial position, strong solvency, and a low debt level. Our group must grow and use new methods of financing acquisitions. In addition to inter- 2 I Groupama 2005 Annual Report

5 A new stage in the Group s development nal financing and borrowings, the Group can now raise money in the stock market. Control will remain with the Regional Mutuals, whose directors are all representatives elected by the members. They will always own at least 51% of Groupama S.A. s capital. This principle is stipulated in the resolution adopted by the Federation s Shareholders Meeting of 24 February What is the outlook? Opening Groupama S.A. s capital is a tool for implementing our strategy. We envisage the following timetable: The first phase has already occurred: the Groupama National Federation has given Groupama S.A. s Board of Directors authorisation to open up the company s share capital, provided that the Regional Mutuals remain the majority shareholder. The next step will be to make one or several investments in major acquisitions, in or outside of France, depending on the opportunities that present themselves. At that point, it will be time to open Groupama S.A. s capital by placing a portion of its shares on the market, to finance or refinance its growth activities. What is the current structure of the Group s corporate governance? The Group s organisation was rationalised on 1 January 2004 to support our strategy. The members are grouped within 7,000 Local Mutuals, which are in turn federated at the Regional Mutual level. The Regional Mutuals appoint the delegates to Groupama National Federation, which represents the members on the national level. Groupama S.A. is almost wholly owned by the Regional Mutuals, who now number 11 in metropolitan France. The reorganisation programme for the Regional Mutuals to maximise efficiency and performance is almost complete. Just two reorganisations remain to be carried out. Groupama S.A. now has a governance standard consistent with other major groups, and has 3 outside directors who were first appointed in The role of Groupama S.A. is to define and implement the Group s operating strategy within the overall guidelines set by the Groupama National Federation. The company provides reinsurance to the Regional Mutuals under exclusive reinsurance contracts, optimises external reinsurance coverage, and sets policies for all the subsidiaries. Groupama 2005 Annual Report I 3

6 Messages from the chairman and the CEO Questions for Jean Azéma, Chief Executive Officer of Groupama How would you summarize the year 2005? 2005 was an excellent year for Groupama. It made major progress, as demonstrated by a 4.8% growth in premium income to 13.5 billion, and most importantly by its 36.2% improvement in operating income, which was slightly over a billion euros, and its net income of 544 million, up 34% compared to These results reflect the performance of all the Group s companies, and demonstrate the soundness of its strategy in the context of the business environment and the goals of the Group. What were the significant events of 2005? We demonstrated our leadership position in the French agricultural insurance market and developed a new product covering climate risks. We wrote almost 56,000 policies. We continued our growth in the motor sector, with a net gain of 35,000 policies. We have consolidated our first place position in individual health insurance with 26,000 new policies and made significant progress in unforeseen events coverage, with a portfolio of 198,000 policies at yearend. And finally, the growth in banking continued, with 55,000 new accounts and 275,000 clients at the end of This new business is being gradually introduced through our networks. There has also been sustained growth in our international business, which posted 7.4% growth. Growth was particularly strong in Portugal, which posted a 40% increase in life and health insurance. This international dynamic allowed us to consolidate our positions during Our network has been refocused and reorganised; it is both profitable and expanding. Southern Europe remains one of our major target markets for international growth, and represents about 70% of our international business. We have also carried out a fundamental reorganisation of our UK business, and it is now in a growth mode too. Our UK subsidiary was named company of the year. We have the capacity for international growth, as our rapid expansion in Portugal demonstrates. We have strengthened our position in Spain, with the successful consolidation of Plus Ultra Generales and the recent acquisition of two small companies; we can now anticipate premium income of about 800 million in Spain in Finally, we have participated in the privatisation of the Basak Group in Turkey, which has allowed us to 4 I Groupama 2005 Annual Report

7 Excellent performance in 2005 become a significant participant in this market, with a 7% market share. Tell us about Groupama s current profitability and solvency? There was a strong progression in the Group s profitability at the combined level in The profitability rate has progressed strongly in the last few years and now stands at 14.4%, thus making a meaningful contribution to the Group s solvency. Our solvency ratio is almost three times the regulatory solvency margin required for our business. Investment income is up strongly. Our profitability rate puts us among the market s strongest performers. Our solvency has increased and we now have additional flexibility due to the General Meeting s decision on 24 February 2006 to open up Groupama S.A. s share capital. This decision gives us an additional tool to finance the growth of the Group. These results demonstrate that we are in a position to improve our results even further through growth and improved margins. We intend to strengthen our combined ratio. To that end, we have embarked upon a programme to analyse the Group s entire marketing and management structure. We can still make further progress in organic growth. Over the last few years, we have made substantial investments. We have renovated our local branches. We have increased our communication budget to support our networks marketing activities. We have especially invested in optimising client relationships and now have an in-depth understanding of our members and clients policy portfolios. All of these investments will bear fruit in What are Groupama s goals for the future? International growth will allow us to further diversify our risks and take part in the unified domestic market which is currently emerging in Europe. We must expand in order to further enhance our competitivity, which is essential in a mature market where product offerings to individuals in France are undergoing rapid development, with the emergence of new distribution channels, including the internet, and the growing power of bancassurance. Finally, our strategy is adapted to changes in society. Demographic shifts are generating new needs in European societies. Groupama has decided to make life and health insurance a major target growth area. Our strategy is targeted at making Groupama one of the 10 leading insurance companies in Europe. With a solid domestic base, we will pursue organic growth as well as acquisitions. With this objective in mind, we have effected major transformations over the last few years, and focussed on growth, profitability, and enhanced solvency for the Group to finance its development in the future. Groupama 2005 Annual Report I 5

8 Strategy and outlook Our focal points Groupama has established a clearly articulated strategy to be implemented over the long term: to strengthen its multi-line insurance position in the French market, to become a global presence in insurance and retail banking in France, to expand its international development, particularly in Europe, to become one of the ten top European insurance companies. The Group will pursue organic growth and seek acquisitions to achieve its goals. ORGANIC GROWTH Groupama is making progress in three priority areas: Innovation: Groupama is pursuing its policy of innovation in product offerings and services. In 2005 it introduced crop insurance for farmers, as well as a new way of helping small and medium size businesses with their employee benefits schemes. In addition, a personal services line, Fourmi Verte, was created with partners. Groupama will continue to develop new product offerings. Competitivity: the Group intends to improve and optimise its management process. Distribution: Groupama has established a client relationship profile which combines various distribution channels and calls for a greater degree of specialisation in the networks, depending on conditions in their markets. Investment in urban areas will also increase. Groupama will strengthen its risk management in order to assure safe growth. Groupama S.A. s Board of Directors has established an Audit and Accounts Committee, one of whose principal tasks is to study the coherence of internal audit and risk management procedures. In 2005, each Regional Mutual and subsidiary of Groupama S.A. was given internal audit responsibility. The managements of all Groupama S.A. s companies are mapping out their own patterns of risks. In addition, a review programme for business contingency plans was inaugurated for the entire Group in Groupama has invested in optimising its human resources. It has strengthened its programmes for identifying high potential employees, facilitated enhancement of their skills, and offered them opportunities for additional experience within the Group (professional development). In 2006, the Group will also work on developing a three year growth plan for France and International. ACQUISITIONS In addition to pursuing organic growth, Groupama intends to perform one or more acquisitions, based on the opportunities available. These operations will be selected on the basis of their fit with our strategy and the maintenance of our profitability. Groupama is a solid group which has demonstrated the capacity to adapt, while maintaining sound financial performance and anticipating the needs of its members and clients. The Group has shown its ability to grow over the long term. It has turned in a sustained and consistent performance. It has also demonstrated its ability to carry out highly successful acquisition operations, in France and at International level, as well as its ability to grow organically. Groupama is ready to enter a new phase of continuing growth to benefit its clients, employees, and all of its shareholders. 6 I Groupama 2005 Annual Report

9 TO STRENGTHEN ITS MULTI-LINE INSURANCE POSITION AS A LEADER IN THE FRENCH MARKET 1 st 2 nd 3 rd insurer for property, agriculture, individual health, and local authorities insurer for motor, marine and transport insurer for small and medium size businesses Groupama 2005 Annual Report I 7

10 Mutual Insurance and Governance

11 Our organisation p.10 Our governance p.12 Faithful to mutual principles and wholly dedicated to sustainable and profitable performance in implemention of the strategy, the new national organisation of Groupama has been functioning since the 1 st of January Groupama 2005 Annual Report I 9

12 Mutual Insurance and Governance Our organisation 5 million Groupama members 7,000 Local Mutuals 11 Regional Mutuals Membership Holding 100% Groupama S.A. 99.9% (1) Fédération nationale Groupama Insurance/Banking in France Services in France Finance International (2) Groupama Vie Assistance (Mutuaide) Group banking (Banque Finama) China (Sichuan) Groupama Chengdu Branch Groupama Banque Compensation in kind (FMB) Groupama Asset Management China (Hong Kong) Gan Hong Kong Credit insurance (Groupama Assurance-Crédit) Accident management (CapsAuto) Finama Private Equity Hungary Groupama Biztosito Legal protection (Groupama Protection Juridique) Remote surveillance (Présence Verte and Activeille) Real estate management (Groupama Immobilier) Italy Groupama Assicurazioni Marine and transport (Groupama Transport) Motor repair training centre (CESVI France) Portugal Groupama Seguros Employee savings (Groupama Epargne Salariale) Driving centres (Centaure) Spain Groupama Seguros Gan Assurances Turkey Basak Sigorta Günes Sigorta (36%) Gan Eurocourtage United Kingdom Groupama Insurances Gan Patrimoine Vietnam Groupama Vietnam Gan Prévoyance Overseas Gan Outre-mer Reinsurance link Capital link (1) 0.1% of Groupama S.A. s equity is owned by the employees and exclusive agents. (2) By alphabetical order. 10 I Groupama 2005 Annual Report

13 TO EXPAND ITS INTERNATIONAL DEVELOPMENT TO BECOME ONE OF THE TEN TOP EUROPEAN INSURANCE COMPANIES The guidelines of our international growth: select markets with high potential, where insurance facilities and products offer significant opportunities for growth; become a major player in each of these markets in order to actively participate in setting the operating framework for the insurance business there; maximise the value of our expertise and the Group s synergies. Groupama 2005 Annual Report I 11

14 Mutual Insurance and Governance Corporate governance dedicated to profitable and sustainable growth The Group s national entities, whose roles are clearly delineated and distinct, are structured as follows: The Groupama National Federation (Fédération Nationale Groupama) is the institutional centre. It represents the members and is thus responsible for defining and controlling the Group s strategic direction. It acts as Agricultural Trade Association and supervises the enhancement and promotion of the Group s mutual operating principles. Groupama S.A. runs the business activities. It is a société anonyme (limited liability company) responsible for steering the Group s businesses, overseeing the reinsurance of the Regional Mutuals under a reinsurance agreement, as well as reinsuring the entire Group and overseeing the growth of the subsidiaries. RULES OF CORPORATE GOVERNANCE: non-executive and executive functions are segregated: there is a clear divide between the steering and monitoring functions, which are performed by the non-executive chairman, and operational management (performed by general management); the three national entities the Groupama National Federation, Groupama S.A. and Groupama Holding share the same chairman and the same CEO. > To open up the share capital On 24 February 2006, the delegates of the Regional Mutuals, meeting on the occasion of the General Meeting of the Groupama National Federation, unanimously voted for the resolution authorising the Board of Directors of Groupama S.A. to open the company s capital, provided that the Regional Mutuals maintained a controlling interest. > Agricultural Trade Association The Federation is active in a number of capacities in professional agricultural organisations, working to give guidance to governmental authorities. At the national level, it acts in concert with the Conseil de l agriculture française (CAF, French Agricultural Council), the Confédération nationale de la mutualité, du crédit et de la coopération agricoles (CNMCCA, National Confederation of Mutuals, Credit and Agricultural Cooperation) among others. At the regional and departmental level this role is particularly important for the agricultural sector. In all cases, Groupama carries out a very specific role, making its contribution to the debate on agricultural development. The Federation has also made major contributions to the debates regarding the Law on Agricultural Policy. The work we did resulted in the inclusion of Groupama s recommendations concerning risk management in the legislative position. The authority of the Comité national de l assurance en agriculture (National Committee on Agricultural Insurance) was expanded beyond isolated disasters to embrace all the agricultural risks, including climate insurance. 12 I Groupama 2005 Annual Report

15 1. Groupama National Federation The Federation serves as the voice for the mutuals and represents their members. It is an association (under the law of 1901) whose only members are the Regional Mutuals. Its mission is threefold: to determine and monitor the overall direction of the Group, to act as an Agricultural Trade Association, to promote and develop the Group s mutual principles. GOVERNING BODIES The General Assembly comprises 374 delegates, 40 from each Regional Mutual in metropolitan France and a total of 14 from overseas and specialist Mutuals. The Board of directors comprises 47 directors, including 5 representatives for each Regional Mutual in metropolitan France and 1 representative for each of the two overseas Mutuals. Two representatives of the Young Farmers organisation are allowed to attend Board meetings. The Board Committee has 18 members, 2 from each Regional Mutual in metropolitan France. It has a Chairman, a first acting Vice Chairman and a second acting Vice Chairman, four* Vice Chairmen and 11 members. The Chairmen s Committee, as of 31 December 2005 it is composed of 11 members, all Chairmen of the Regional Mutuals in metropolitan France. Members of this committee are also directors of Groupama Holding and Groupama S.A. The Chairmen s Committee provides a forum for discussion and exchanges of view; the Board Committee reviews and recommends broad strategies; and the Board of Directors as a group debates and approves the broad strategies presented by the Board Committee. The Board of Director s work is guided by studies and reviews conducted by commissions. The Chairmen s Committee met 8 times** in 2005, the Board Committee 6 times and the Board of Directors 7 times. Directors remuneration Directors functions are exercised without payment. For the fiscal year ending on 31 December 2005, the Federation granted 277,800 (gross fiscal amount) to the members of the Board of Directors as compensation for prior periods. Directors also receive reimbursement of their expenses. The executive The implementation of the Board of Directors decisions and management of the Federation are the responsibility of the Chief Executive Officer of Groupama S.A., who is also Chief Executive Officer of the Federation. * Five Vice Chairmen at the present situation. ** A seminar bringing together the Chairmen s Committee and the Chief Executive Officers of the Group Executive Committee met two times in 2005.

16 The Federation nationale Groupama Chairmen s Committee Jean-Luc BAUCHEREL Chairman Groupama Loire Bretagne 2008 Francis AUSSAT Acting Chairman Groupama d Oc 2010 Robert DROUET Acting Vice Chairman Groupama Centre-Manche 2008 Jean BALIGAND Vice Chairman Groupama Rhône-Alpes Auvergne 2010 Annie BOCQUET Groupama Nord-Est 2006 Jean-Charles COURTOIS Groupama Centre-Manche 2006 Jean-Marc FABRE Groupama d Oc 2008 Directors Other Board Committee members Michel BAYLET Groupama Centre-Atlantique 2010 Régis BLONDY Groupama Centre-Atlantique 2008 Daniel BOITTIN Groupama Centre-Manche 2006 Alain BRUNET Groupama Paris Val de Loire 2006 François DESNOUES Groupama Paris Val de Loire 2010 Marie-Ange DUBOST Groupama Centre-Manche 2010 Didier FOUCQUE Groupama Océan Indien 2010 Daniel LUTRAT Groupama Nord-Est 2010 Jean MERLE Groupama Rhône-Alpes Auvergne 2006 Guy PELLETIER Groupama Centre-Manche 2008 NB: the dates mentionned refer to the years for reelection to the Board.

17 Solange LONGUET Vice Chairman Treasurer Groupama Paris Val de Loire 2008 Jean-Pierre ROUSSEAU Vice Chairman Groupama Centre-Atlantique 2008 Jean-Luc VIET Vice Chairman-Secretary of the board Groupama Nord-Est 2008 Jean-Luc WIBRATTE Vice Chairman Groupama Grand Est 2006 Michel HABIG Board Committee member Groupama Alsace 2010 Marius MUL Board Committee member Groupama Alpes-Méditerranée 2008 Roger PAILLES Board Committee member Groupama Sud 2010 Charles LACAZE Groupama d Oc 2010 Jean-Paul NIEUTIN Groupama Paris Val de Loire 2010 Alain PARGADE Groupama Centre-Atlantique 2006 Jean-Jacques ROZIER Groupama Rhône-Alpes Auvergne 2008 Joseph VIVANT Groupama Loire Bretagne 2010 Jean-Jacques CANEVET Groupama Loire Bretagne 2010 Georges CHARRON Groupama Loire Bretagne 2006 Amaury CORNUT-CHAUVINC Groupama Sud 2006 Robert COSTE Groupama Alpes-Méditerranée 2010 Jean-Yves DAGÈS Groupama d Oc 2006 Jean-Pierre DECOOL Groupama Nord-Est 2008 Christian GUILLAUME Groupama Grand Est 2008 Jean-Luc HENRY Groupama Sud 2006 Jean JARNAC Groupama Antilles-Guyane 2006 Didier LALUET Groupama d Oc 2006 Remy LOSSER Groupama Alsace 2008 Georges LUCAS Groupama Loire Bretagne 2008 Pascal POMMIER Groupama Paris Val de Loire 2006 Jean-Pierre RAMAGET Groupama Grand Est 2010 Bernard ROUSSEAUX Groupama Nord-Est 2006 Patrick SEGUIN Groupama Rhône-Alpes Auvergne 2010 Michel TEILLON Groupama Rhône-Alpes Auvergne 2006 Lionel VEQUAUD Groupama Centre-Atlantique 2010 Agricultural Association (Young Farmers) representatives: Emmanuel LACHAIZE and Jérôme VOLLE Groupama 2005 Annual Report I 13

18 Mutual Insurance and Governance Corporate governance dedicated to profitable and sustainable growth There were two major changes at the beginning of 2005, which demonstrate the Group s determination to enhance the effectiveness of its corporate governance. On 24 February 2005 the Annual General Meeting of Groupama S.A. approved the appointment of three outside directors to the Board of Groupama S.A., raising the total number of directors from 13 to 16. Following these appointments, the Board of Directors of Groupama S.A. established three specialist committees which are responsible for preparation of the Board s work: the Audit and Accounts Committee, the Agreements Committee, and the Remuneration and Appointments Committee. An outside director presides over the first two committees. > Committees of the board Audit and Accounts Committee Frédéric Lemoine Chairman Jean-Luc Wibratte Roger Pailles Philippe Vassor Remuneration and Appointments Committee Francis Aussat Chairman Jean-Luc Wibratte Robert Drouet Solange Longuet Frédéric Lemoine Agreements Committee Philippe Vassor Chairman Jean-Luc Wibratte Jean-Luc Viet 14 I Groupama 2005 Annual Report

19 2. Groupama S.A. Groupama S.A. is a société anonyme (limited liability company) almost entirely owned indirectly by the Regional Mutuals. Its activities include: defining and implementing the Groupama group s operating strategy, consistent with the general guidelines established by the Groupama National Federation, reinsuring the Regional Mutuals and the subsidiaries (internal reinsurance), overseeing all subsidiaries and performing various transactions on their behalf, establishing an external reinsurance programme for the Group. ADMINISTRATION AND GENERAL MANAGEMENT Groupama S.A. is governed by a Board of Directors whose mission is to determine the broad strategies of the company s business and monitor their implementation. As of 1 January 2005, Groupama S.A. s Board of Directors comprised 13 directors, of whom 11 represent the controlling shareholders, appointed by the Annual Ordinary Meeting for a 6-year term, and 2 of whom are elected by the company s salaried employees for a 4-year term. Three external directors were appointed for a 6-year term by the General Assembly held on 24 February Since that date there have therefore always been 16 directors. The Board of Directors met 9 times during 2005.

20 The principal activities of the Board s committees in 2005: THE AUDIT AND ACCOUNTS COMMITTEE Examined the 2004 annual and 2005 half-annual financial statements and the impact of IFRS accounting standards on the Group s statements; examined the rules and accounting options applied in drawing up the 2005 statements; examined the internal audit group; oversaw the preliminary 2006 audit; studied the performance of the statutory auditors vis à vis their missions; reviewed the renewal of their terms, their remuneration, and the status of their role within the Board; and developed a new charter governing their tasks, which was adopted by the Board of Directors on 14 December THE REMUNERATION AND APPOINTMENTS COMMITTEE Decided on policy for the remuneration of the company s top executives; prepared a plan for the allocation of directors fees from 1 January 2006; planned a new supplementary retirement programme for directors; and at the beginning of 2006 it evaluated the Board of Directors modus operandi. THE AGREEMENTS COMMITTEE Examined the General Reinsurance Regulations; prepared a study of the business relationships between the Regional Mutuals and the company and its subsidiaries, and of a framework agreement that governs all these relationships; studied regulated agreements. Remuneration of members of Groupama S.A. s Board: The directors fees paid by Groupama S.A. and Groupama Holding to the directors of Groupama S.A. (excluding employee representatives) in respect of their duties amounted to 443,800. The remuneration of staff side representatives appears in the management report. General management of the company is assumed by a Chief Executive Officer as defined under the NRE Law*, who represents the company in dealings with third parties, and has the widest powers to act in the company s name in all situations, consistent with its corporate purpose and within the limits set by the Board of Directors. * French New Economic Regulations Act ( NRE ) dated 15 May 2001.

21 Groupama S.A. board of directors Jean-Luc BAUCHEREL Chairman Groupama Loire Bretagne Jean-Luc WIBRATTE Vice Chairman Groupama Grand Est Francis AUSSAT Director Groupama d Oc Jean BALIGAND Director Groupama Rhône-Alpes Auvergne Robert DROUET Director Groupama Centre-Manche Michel HABIG Director Groupama Alsace Solange LONGUET Director Groupama Paris Val de Loire Marius MUL Director Groupama Alpes-Méditerranée Roger PAILLES Director Groupama Sud Jean-Pierre ROUSSEAU Director Groupama Centre-Atlantique Jean-Luc VIET Director Groupama Nord-Est Frédéric LEMOINE Outside director Jean SALMON Outside director Philippe VASSOR Outside director Henri DURAND Director elected by employees Groupama S.A. Christian GARIN Director elected by employees Groupama S.A. Groupama 2005 Annual Report I 15

22 The Group Executive Committee I Christophe BUSO Managing Director Groupama Centre-Atlantique 2 I Philippe CARRAUD Managing Director Groupama d Oc 3 I Patrice CHÉREAU Managing Director Groupama Loire Bretagne 4 I Daniel CRÉDOT Managing Director Groupama Paris Val de Loire 5 I Claude DOLLÉ Managing Director Groupama Alsace 6 I Yves EVENO Managing Director Groupama Alpes-Méditerranée 7 I Daniel GABORIAU Managing Director Groupama Nord-Est 8 I François GOUTAGNEUX Managing Director Groupama Rhône-Alpes Auvergne 9 I Jean-Paul HUE Managing Director Groupama Centre-Manche 10 I Gérard JOALLAND Managing Director Groupama Grand Est 11 I Alain KAHN Managing Director Groupama Sud Groupama S.A. : 12 I Jean AZÉMA Chief Executive Officer Groupama S.A. 13 I Christian COLLIN Corporate Secretary - Strategy & HR Group 14 I Thierry COURET General Manager Insurance/Banking and Services in France 15 I Jean-François LEMOUX General Manager International 16 I Helman LE PAS DE SÉCHEVAL General Manager, Chief Financial Officer 17 I Patrick COURTOT General Manager Non-life Insurance and Services, General Manager Gan Assurances 18 I Jacques GUYOT Director, IT Divisions 19 I Thierry MARTEL General Manager Life and Health Insurance 20 I Jean-Marc VERVELLE General Manager Commercial and Institutional Insurance Steering groups for the Group s operational strategy: the Group Executive Committee and associated authorities The Group Executive Committee ( GEC ) is engaged in the development and operational supervision of the Group, with the support of the Strategy Direction Group. It implements strategies within the Group, ensuring the operational coordination of all the Group s businesses. Chief Executive Officer of Groupama S.A. presides. It meets once a month, for a day and a half. Specialised operating committees for business lines, development, information technology, finance, and human resources include appropriate managers from the Group s entities. They prepare reports for the GEC and suggest measures to be taken at the operating level to apply strategic directives. The GEC is composed of the Chief Executive Officers of the Regional Mutuals and the senior managers of Groupama S.A. The 16 I Groupama 2005 Annual Report

23 The Steering Committee of Groupama S.A. Steering group for Groupama S.A.: the Steering Committee The Steering Committee assists the Chief Executive Officer of Groupama S.A. in his management mission for Groupama S.A. It defines Groupama S.A. s strategy within the Group s overall objectives and directs the French and international subsidiaries. Responsible for preparing and approving the operating decisions emanating from Groupama S.A., it establishes the work priorities of the various Groupama S.A. Management Bodies and monitors application of their decisions. major management bodies of Groupama S.A. and the Chief Executive Officer. A Limited Steering Committee, composed of 8 members, assists the Chief Executive Officer of Groupama S.A. in his management tasks, and meets every two weeks. Remuneration of the members of Groupama S.A. s Steering Committee Members of Groupama S.A. s Executive Committee received gross total remuneration, including benefits in kind, of 4,337,331 of which 563,250 represented variable remuneration. With 13 members, the Steering Committee convenes a 1-day meeting each quarter bringing together representatives of the I Jean AZÉMA* Chief Executive Officer Groupama S.A. 2 I Christian COLLIN* Corporate Secretary Strategy & HR Group 3 I Thierry COURET* General Manager Insurance/Banking and Services in France 4 I Jean-François LEMOUX* General Manager International 5 I Helman LE PAS DE SÉCHEVAL* General Manager, Chief Financial Officer 6 I Pascal ALEXANDRE Director, Group Human Resources 7 I Patrick COURTOT General Manager Non-life Insurance and Services, General Manager Gan Assurances 8 I Frédérique GRANADO* Director, External Communications 9 I Jacques GUYOT Director, IT Division 10 I Benoît MAES* Director, General Auditing and Actuarial division 11 I Thierry MARTEL General Manager Life and Health Insurance 12 I Jean-Marc VERVELLE General Manager Commercial and Institutional Insurance 13 I Bertrand WOIRHAYE* Director, The Fédération Nationale Groupama * Members of the limited Steering Committee. Groupama 2005 Annual Report I 17

24 Key figures Combined accounts Financial statements are published in accordance with IFRS standards GROUP COMBINED FINANCIAL STATEMENTS Group combined financial statements Local Mutuals Regional Mutuals (1) Groupama S.A KEY DATA - millions Premium income - France 11, % Premium income - International 2, % Financial activities % Total 13, % Net profit % Changes are indicated as current change was a very profitable year. These results reflect all the efforts made by the Group to strengthen efficiency and performance. Subsidiaries Insurance Banking in France International subsidiaries PREMIUM INCOME UP 4.8% - millions Services in France (1) Held indirectly by a holding company. Capital link Reinsurance link Financial subsidiaries 12, ,481 12, ,481 13, , % Health and life insurance +3.4% Property and liability insurance The combined financial statements cover the Groupama Group, which consists of all the Local mutuals, the Regional mutuals, Groupama S.A. and the subsidiaries. The Local mutuals transfer almost all of their premium income to the Regional Mutuals, which then transfer approximately 40% of their premium income to Groupama S.A. This reinsurance system is governed by internal agreements. The Regional Mutuals hold nearly 100% of Groupama S.A. (0.1% of the capital of Groupama S.A. is held by the employees and agents). 1,319 5, published 1,319 5, pro forma 1,381 5, Financial activities Health and life Insurance - International Health and life Insurance - France Property and liability Insurance - International Property and liability Insurance - France Activities discontinued Insurance activities in France rose +4.7% (+3.8% on a comparable basis), with varying performances depending on the market: - in life and health insurance, the Group recorded growth of +6.3%, which accelerated at year end; - in property and liability insurance, the Group recorded an increase of +3.1% (+1.2% on a like for like basis). Banking operations in France rose 61%. The net growth in the portfolio of Groupama Banque was 55,000 accounts in The international insurance segment recorded growth of +7.4%, excluding discontinued operations (+7.3% on a like for like basis), stimulated by the growth of the subsidiaries in Great Britain, Spain, Italy and Portugal, particularly in life and health insurance. 18 I Groupama 2005 Annual Report

25 Key figures Consolidated accounts Financial statements are published in accordance with IFRS standards 2005 KEY DATA - millions Premium income - France 8, % Premium income - International 2, % Financial activities % Total 10, % Net profit % The changes are indicated as current change. The consolidated premium income of Groupama S.A. represents 80% of the Group s combined premium income. These strong results reflect the improvement in technical fundamentals combined with the positive performance of the financial markets. CONSOLIDATED FINANCIAL STATEMENTS OF GROUPAMA S.A. Local Mutuals Regional Mutuals Groupama S.A. Consolidated financial statements (1) Groupama S.A. Subsidiaries PREMIUM INCOME 6.0% - millions Insurance Banking France International subsidiaries 10, ,658 1,319 3, published 10, ,658 1,319 3, pro forma 10, ,940 1,381 3, % Health and life insurance +5.9% Property and liability insurance Financial activities Health and life Insurance - Internationnale Health and life Insurance - France Property and liability Insurance - Internationale Property and liability Insurance - France Activities discontinued In France, Groupama S.A. recorded growth of 6.2% (4.6% on a like for like basis). The growth in property and liability insurance was +6.4% (2.6% on a like for like basis), outperforming the market. In life and health insurance, Groupama S.A. recorded growth of 6.1%, which accelerated at the end of the year. In this entity, premium income contributed by the network of Regional funds (1) totalled 3.4 billion euros, up 6.7% over 2004 (6.3% on a like for like basis). Consolidated international premium income amounted to 2.0 billion euros, and represents 19% of total premium income. Premium income rose 7.4% over the previous year, excluding discontinued operations. Production was stronger in life and health insurance (+14.0%) than in non-life insurance (+4.7%). (1) Internal reinsurance of Groupama SA and premium income of Groupama Vie. Services France (1) Held inderectly by a holding company Capital link Reinsurance link Financial subsidiaries The consolidated financial statements of Groupama S.A. integrate the reinsurance transferred by the Regional Mutuals (approximately 40% of their premium income in 2005) as well as the activity of the subsidiaries. This consolidated entity will be listed if the future growth of the Group requires. Therefore, the premium income retained by the regional funds is not consolidated. Groupama 2005 Annual Report I 19

26 Key figures Combined accounts Financial statements are published in accordance with IFRS standards INSURANCE OPERATING PROFIT - millions NON-LIFE INSURANCE: COMBINED RATIO (1) 0.8 POINT , % 103.7% 27.4% 102.7% 26.7% 101.0% 28.8% 100.8% 29.5% 103.2% 27.7% 102.4% 27.2% Life Non-life 76.3% 76.0% 72.2% 71.3% 75.5% 75.2% The growth in insurance operating income was mainly generated by the increase in the income of the non-life business. This substantial improvement comes from the improvement in the technical ratios and the growth in net financial income. CHANGE FINANCIAL INCOME (1) - millions 474 2, , ,080 2, , % Capital gains/losses from net sales (including charges to provisions and reversals of provisions) Investment income Change in the fair value for IFT and trading Financial income (net capital gains realised and investment income) was up because of the strong performance of the financial markets. (1) 100% including minority holdings and policyholders share France Operating costs ratio Claims ratio The net combined ratio dropped 0.8 point from the previous year, on a like for like basis. In France, the combined ratio was 102.7%, down 1.0 point from 2004 on a like for like basis because of the drop in the ratio of net operating expenses ( 0.7 point) and the net claims ratio ( 0.3 point). The ratio for international was 100.8% ( 0.2 point from 2004). This result is primarily due to a favourable trend in net claims, particularly in Great Britain. (1) Combined ratio = (net cost of claims + operating costs)/net premiums acquired. STRENGTHENED FINANCIAL STRUCTURE Strong unrealised capital gains on all types of assets millions 10, % 6, ,757 2, Derivatives Properties Unrealised capital gains not included in the balance sheet International 139 3,288 4,095 2, Bonds Equities 2004 Group 2005 Unrealised capital gains totalled 10.3 billion euros, up 3.6 billion euros, driven by the growth in the financial and property markets. Insurance investments (including unit-linked investments) totalled 68.9 billion euros, compared with 61.7 billion euros at year-end 2004, an increase of 7.2 billion euros (+11.7%). The structure of these investments is as follows: - bonds 65% - shares 22% - properties 6% - unit-linked investments 5% - other securities 2% 20 I Groupama 2005 Annual Report

27 Key figures Consolidated accounts Financial statements are published in accordance with IFRS standards NON-LIFE INSURANCE: COMBINED RATIO (1) 0.8 POINT 106.0% 104.9% 101.0% 100.8% 104.6% 103.8% 31.1% 29.7% 28.8% 29.5% 30.4% 29.6% INSURANCE OPERATING PROFIT - millions % % 75.2% 72.2% 71.3% 74.2% 74.2% France Operating cost ratio Claims ratio The net combined ratio declined 0.8 point from the previous year, on a like for like basis. In France, the combined ratio was 104.9%, down 1.1 point from 2004 on a like for like basis, because of the drop in the ratio of net operating expenses ( 1.4 point). However, this improvement was moderated by a slight increase in the net loss ratio (+0.3 point) due primarily to the reloadings on injury claims (effect of the decline in rates). In the international segment, the ratio was 100.8% ( 0.2 point from 2004). This result was driven primarily by a favourable trend in net claims, particularly in Great Britain. It should be noted that Groupama has always had a very conservative provisions policy. (1) Combined ratio = (net cost of claims + operating costs)/net premiums acquired. STRENGTHENED FINANCIAL STRUCTURE Strong unrealised capital gains on all types of assets millions +55.6% 246 2,492 2, , Derivatives Properties Unrealised capital gains not included in the balance sheet International 9, , M 3,970 +1,104 M 2,388 +1,897 M 2005 Bonds Equities 2004 Group 2005 Unrealised gains were up because of the growth in the financial and property markets. The amount of investments (including unit-linked investments) at market value with the exception of property which remains at amortised cost totalled 63.9 billion euros, up from 57 billion in 2004, an increase of nearly 7 billion euros. The structure of the investments is as follows: - bonds 67% - shares 21% - properties 5% - unit-linked policies 5% - other securities 2% 2004 Life Non-life For the non-life segment, the significant improvement comes from the improvement in technical ratios and from the growth in net investment income. Income remained high in the life segment. CHANGE IN FINANCIAL INCOME (1) - millions 372 2, , , , % Capital gains/losses from net sales (including charges to provisions and reversals of provisions) Investment income Change in the fair value for IFT and trading Financial income (realised capital gains and investment income) were up because of the strong performance of the financial markets. The rate of realisation of capital gains was 8.3% in 2005, compared with 9.1% in 2004 (excluding the impact of consolidated mutual funds). The growth in gains realised is related to the sales results within the mutual funds in the amount of 341 million euros and to the methods for calculating provisions for impairment (under IFRS, provisions are reversed only in the case of realisation). (1) 100% including minority holdings and policyholders share. Groupama 2005 Annual Report I 21

28 Key figures Combined accounts Financial statements are published in accordance with IFRS standards PROFITABILITY USED TO FINANCE GROWTH 6.8% 6.5% (2) % 14.4% Net profit before amortisation of goodwill ( M) RoE (1) before goodwill (1) combined group: opening equity, excluding revaluation reserve under IFRS. (2) before exceptional provision relating to SCOR. The Group s profitability has been improving for several years. SHARP RISE IN NET PROFIT: +34% - millions Change Operating profit 741 1, % Financing expenses % Income tax % Minority interests and companies accounted for the equity method % Group net profit % The increase in the Group s operating income is the result of the growth in investment income, but also from the continued improvement of the technical fundamentals. Life operating income remained high; non-life income rose sharply. Financing expenses were down from the previous year, despite the issue of a perpetual floating rate note (TSDI) for 500 million euros in July 2005 on advantageous terms. The repayment of loans that matured at the end of 2004 helped to reduce the financing costs. The change in the consolidated tax liability is due primarily to the very clear improvement in operating income over the period. The income from equity associates at 31 December 2005 totalled 2 million euros. The income owed to minority interests was 35 million euros in 2005, compared with 29 million euros in This primarily represents the income owed to the minority shareholders of SILIC. CONTRIBUTION OF BUSINESSES TO NET PROFIT - millions All the operating activities of the Group improved their positive contribution to the results, with the exception of the Groupama Banque, which is in a launch phase. The total contribution of the insurance/banking and services activities in France (non-life and life) was stable from The contribution of international insurance represented a profit of 118 million euros, double the contribution in This result was generated by the strong performance of the subsidiaries in Spain and Great Britain. The contribution of the Group s financial operations (asset management) amounted to 26 million euros, double the contribution in 2004, primarily because of the performance of Groupama Asset Management and its subsidiaries. Other : this primarily represents the contribution of the holding companies (financing and operational planning of the Group) Insurance, Banking and Services in France International Insurance Financial Activities Stable result for France Sharp rise in the international result Holding companies and Other I Groupama 2005 Annual Report

29 Key figures Consolidated accounts Financial statements are published in accordance with IFRS standards SHARP RISE IN NET PROFIT: +25.1% - millions Change Operating profit % Financing expenses % Income tax % Minority interests and companies accounted for the equity method % Group net profit % The increase in consolidated operating income is the result of the growth in financial income, but also from the improvement of the technical fundamentals. Life operating income remained high; non-life income rose sharply. Financing expenses were down from the previous year, despite the issue of a perpetual floating rate note (TSDI) for 500 million euros in July 2005 on advantageous terms. The repayment of loans that matured at the end of 2004 helped to reduce the financing costs. The change in the consolidated tax liability is due primarily to the very clear improvement in operating income over the period. The income from equity associates at 31 December 2005 totalled 1.8 million euros. The income owed to minority interests was 37 million euros in 2005, compared with 30 million euros in This primarily represents the income owed to the minority shareholders of SILIC. CONTRIBUTION OF BUSINESSES TO NET PROFIT - millions Stable result for France Sharp rise in the international result All the operating activities of the Group improved their positive contribution to the results, All the operating activities of the Group improved their positive contribution to the results Insurance, Banking and Services in France International Insurance Financial Activities Holding companies and Other The total contribution of the insurance/banking and services activities in France (non-life and life) was stable from The contribution of international insurance more than doubled from This result was generated by the strong performance of the subsidiaries in Spain and Great Britain. The contribution of the Group s financial operations (asset management) amounted to 26 million euros, double the contribution in 2004, primarily because of the performance of Groupama Asset Management and its subsidiaries. Other : this primarily represents the contribution of the holding companies (financing and operational planning of the Group). Groupama 2005 Annual Report I 23

30 Key figures Combined accounts Financial statements are published in accordance with IFRS standards GROWTH IN ASSETS UNDER MANAGEMENT: +17.1% - millions % FINANCIAL SOLVENCY USED TO FINANCE GROWTH Stronger financial position euros million 195% 207% 233% 291% Private equity Properties Cash and other Stocks Bonds European solvency margin (1) 2005 Groupama has strengthened its financial position in recent years, primarily because of the improvement in operating results and the growth in unrealised gains. At the end of December 2005, the solvency margin covered nearly 3 times the Group s margin requirement. The issuance of the subordinated bond strengthened the financial structure. It should be noted that the insurance debt ratio declined 3.2 points to 25.8%. (1) Under Solvency I, including partial consideration of the future life insurance profits. Total investments under management by the asset management subsidiaries at 31 December 2005 (excluding private equity and property) amount to 68.6 billion euros. Net premium income of the asset management division surged 26% to 107 million euros. This improvement was driven both by the strong performance of the financial markets and by the increase in amounts collected. STRENGTHENED FINANCIAL STRUCTURE - millions 4,917 +2, , Increase in shareholders equity (Group share) of 1.5 billion, +31.4% 6,459 +1,542 Shareholders equity Assets avialable for sale Shadow accounting Deferred taxes Other Result Shareholders equity At 31 December 2005, the consolidated shareholders equity of Groupama totalled 6.5 billion euros, up sharply over 31 December This change was driven by the growth in the Group s result and the change in the financial markets. 24 I Groupama 2005 Annual Report

31 Key figures Consolidated accounts Financial statements are published in accordance with IFRS standards STRENGTHENED FINANCIAL STRUCTURE - millions Change Equity 3,114 4, % Subordinated debt 750 1, % Gross technical reserves 55,455 60, % Balance sheet total 67,799 74, % (1) Gross technical reserves on gross premium income. (2) According to Solvency I, with partial inclusion of future life insurance profits. Consolidated non-life reserve ration (1) 216% 212% 4.0 pts European solvency margin (2) 175% 253% pts Net debt ration 40.4% 36.0% 4.4 pts ROE (excluding fair value effect) 15.5% 19.2% +3.7 pts Subordinated liabilities rose because of the issue of a perpetual subordinated bond in a nominal amount of 500 million euros in The amount of gross technical reserves for the non-life insurance business remained higher than two years of premiums. Groupama improved its financial situation, driven primarily by the improvement in operating income and the rise in unrealised gains. The solvency margin at the end of December 2005 calculated as required by the European Directive covered 253% of the Group s margin requirement, compared with 175% in 2004 (under IFRS). The issuance of the subordinated bond strengthened the financial structure. STRENGTHENED FINANCIAL STRUCTURE - millions +2, , ,273 4,387 3,114 Increase in shareholders equity (Group share) of 1.3 billion, +40.9% Shareholders equity Assets avialable for sale Shadow accounting Deferred taxes Other Result Shareholders equity The sharp increase in shareholders equity is due to: - the growth in the Group s result, and - the change in the financial markets. Groupama 2005 Annual Report I 25

32 The driving forces behind our success

33 Mutual insurance and guiding principles p.28 Human resources p.30 Information systems p.34 Networks p.39 A spirit of responsibility and efficiency lies at the heart of Groupama s activities, based on the historical foundations of agricultural mutual insurance. As it moves forward, Groupama offers the benefit of its vast experience to meet the needs of its customers, drawing on the expertise of its employees and networks while investing in synergies generated by the scale of the Group s operations. Groupama 2005 Annual Report I 27

34 The driving forces behind our success Principles of mutual insurance Groupama s mutual insurance, the force that drives our performance Our first priority: to strive for member and customer satisfaction. Groupama believes that the satisfaction of its members and customers is the key to its success. High quality service is the Group s raison d être, because the members themselves constitute and manage the Group (see the frame below). The demand for delivery of quality services that answer needs in the most cost-effective way produces strong financial performance. Groupama benefits from the entrepreneurial spirit of farmers who have been able to develop their activities into genuine businesses. Sustainable profitable growth and successful adaptation Groupama strives for and achieves sustained profits by constantly adapting to current market conditions and building on its mutual identity and agricultural heritage. A few key dates illustrating Groupama s ability to adapt and anticipate the future: 19 th /early 20 th century: growth of the mutual system for agriculture and Local Mutuals; the insurance mutual, the foremost agricultural insurer, took the name Groupama in : coverage of all non-life insurance risks; the Group rapidly becomes the largest local authorities insurer in France. 1972: introduction of life insurance. 1995: membership opened to all policy holders. 1998: acquisition of the fourth-largest French insurance company, Gan. The Group is now one of the largest multi-line insurers in France. It has 5 million members and 3 million Gan customers. 2001: plan targeted at reorganising the Regional Mutuals, with the goal of reducing the number from 18 to 9 homogeneous entities. 2002: acquisition of Plus Ultra Generales in Spain and of CGU Courtage in France. Creation of Groupama Banque. 2003: introduction of banking products. 2004: restructuring of the Group s central organisation to adapt it to a growth strategy. The CCAMA was dissolved, and its roles were split between Groupama S.A. and the Groupama National Federation. 2004: opening of first branch in China. 2005: 3 outside directors added to Groupama S.A. s Board of Directors. 2006: authorisation given by the Groupama National Federation to open up the share capital of Groupama S.A., if this is needed to finance future growth. 2006: acquisition of the 6 th largest Turkish insurer, the Basak group. > How Groupama works the elective system The principle: members elect their representatives at local level; these in turn elect representatives at regional and national levels. The representatives, who are all policy holders of the Mutual, control all the boards of directors of the mutual Group s entities. They choose the executives who manage operating activities. The Local Mutual is the basis of the mutual system s territorial organisation. It insures the members in its area and is managed by a board of representatives composed of members elected to the General Assembly. There are 7,000 Local Mutuals throughout France. The local managers appoint the representatives to the General Assembly of the Federation at the departmental level; this body is a forum for exchanges of view and dialogue. The Local Mutuals representatives also participate in the General Assembly of the Regional Mutuals, which are fully operational business entities engaged in all types of insurance activities, through a marketing network of salaried employees and agents, as well as management services. The members of the General Assemblies of the Regional Mutuals elect the directors of their Boards of Directors, who in turn select their own delegates to the General Assembly of the National Federation, the entity which is primarily responsible for setting the overall strategy and direction of the Group. 28 I Groupama 2005 Annual Report

35 Centre-Manche Paris Val de Loire Nord-Est Grand Est Loire Bretagne Alsace Centre- Atlantique Oc Sud Rhône-Alpes Auvergne Alpes- Méditerranée Metropolitan Mutuals: 11 Total number of Mutuals: 15 Specialised Mutuals Forestry Tobacco Producers Overseas Mutuals French West Indies Indian Ocean The resources to make the guiding principles of agricultural mutual insurance a reality Based on agricultural mutual insurance, Groupama s operating principles drive the Group s growth. A local presence The Group s elected representatives and employees are in close touch with their territories, present throughout the country, listening attentively to the needs of members and customers. They are committed to finding real-world solutions. Responsibility This is both individual and collective and works at every level of the organisation. Responsibility and prudent preventive measures are expressions of a sound approach to the insurance profession. Solidarity Mutual aid is at the heart of the Mutuals business. We share resources to assist those who have undergone a loss or injury. This is thoughtfully considered solidarity, on both the financial and human fronts. The spirit of collegiality and the role of elected representatives The spirit of collegiality is evidenced in the many debates that occur during General Assemblies, Board of Directors meetings, task forces and working meetings. Groupama is a company made up of individuals. Every significant decision is the product of extensive shared reflection which ultimately produces a consensus. The decisions that are definitively taken are then implemented with attention to efficiency and alacrity. Over 400,000 members almost 10% of the total participate annually in the General Assemblies of the Local Mutuals, during which they approve the financial statements, learn about the new policies and services offered by Groupama, and current topics of importance. They are encouraged to speak, offering their comments and suggestions, and they elect representatives from within their number to the Local Mutual s Board of Directors. 90,000 directors are elected in all to represent the 7,000 Local Mutuals. Local directors, who are all volunteers, have the primary mission of listening to the needs and expectations of members in their area. More concretely, they act as relay points between policy holders and the business with the goal of improving the quality of insurance coverage, services and product offerings. They are advocates for the marketing network and supervise claims control in the portfolio of their Local Mutuals. They may assist experts during claim assessments and initiate programmes on risk awareness and prevention. At the regional level, the elected representatives give their opinions on the broad strategies and the marketing policies of the Regional Mutuals; they also vote on the budget. Operational management is the responsibility of the General Manager of the Mutual. With its strong local and regional presence, Groupama has the ability to mobilise effectively at short notice. At the time of the natural disasters that have stricken France in recent years, the Group was able to immediately mobilise its experts, managers and employees to organise aid missions and process thousands of claims in a short period of time. There was concrete evidence of this effective organisation during the flooding that occurred in the south of France in September A sound financial structure is at the heart of the Group Internal reinsurance, a system with historic ties to the establishment and growth of Groupama, is a concrete illustration of the principles of responsibility and solidarity. Combining our resources strengthens the Group. Each level of the organisation establishes financial protection with the level above. The Local Mutuals thus reinsure themselves with their Regional Mutuals, giving them most of their premium income. The Regional Mutuals then reinsure themselves exclusively with the central organisation, Groupama S.A. The general management of reinsurance at the Groupama level is based on internal treaties which represent permanent and exclusive ties shared by all the Mutuals. The basic principle is the mutual sharing of a portion of risks, with solidarity among the Local and Regional Mutuals and Groupama S.A., and accountability at each organisational level. The goal is to assure continuity in the businesses of the Regional Mutuals and to optimise their underwriting capacity. Since 1 January 2005, all of the Regional Mutuals are reinsured in the same way, with identical coverage regardless of their size. The quota share cession rate is thus uniform for the three large categories of risk: for primary risks (85% of premium income): 30%; for climate risks: 50%; for heavy commercial risks: 50%. Quota share retentions are protected by reinsurance exceeding the claim (réassurance en excédent de sinsitres) or Stop Loss. In addition, Groupama S.A. reinsures the French and overseas subsidiaries as well as the Regional Mutuals. Groupama S.A. renegotiates and renews external reinsurance contracts on behalf of the whole Group every year. Groupama 2005 Annual Report I 29

36 The driving forces behind our success Human Resources Human Resources, the foundation of the Group s ambitions Recruiting, encouraging employee mobility, developing employees skills, preparing tomorrow s leaders, guiding and creating a new workplace dynamic, partnering change with dialogue and internal communication: these are the guiding principles of Human Resource policies in support of the Group s strategy of profitable and sustainable growth. With its 32,190 employees [26,600 of whom are salaried employees in France, 2,750 salaried employees in International, and with 1,950 permanent (contrat à durée indéterminée) employees recruited annually], Groupama, a key employer in the French market, is building its future. Groupama stays loyal to its decentralised organisational structure. Each of its 56 businesses is responsible for its own human resource management and personnel policies, within the broad directives established by the Group. The Group s Human Resources Division contributes to the development of these guidelines. Attract, recruit, integrate In 2005 the Group s businesses recruited 1,950 new employees on a permanent basis to strengthen their business networks and customer relations groups, and staff their management and specialist teams (marketing, management control, actuarial, information technology, etc.). 46% of these new staff were under 30 and 73% had academic credentials of at least Baccalaureate +2 years further education. Continuing its ongoing Marque Employeur communications policy, which is aimed at communicating information on its businesses, the Group has participated actively in job fairs in the provinces and Paris (Top Toulouse, Apec Amiens, Apec Lille, TopFi, Initialis, etc.). These gatherings offer job candidates an opportunity to meet the various Group businesses at a stand flying the Group s colours. The shared slogan of all the Group s businesses is prominent in these forums: Projects that bring us together. The same slogan is used in the institutional information provided to potential candidates. The recruitment and mobility network is also refining the tools for integrating new employees into the organisation. This process is essential to their professional development, loyalty and sense of belonging. Groupama in 4 steps (an information package giving new employees the chance to learn about the Group, any time, any place) includes a modular brochure specially designed for the business which has hired them. A Good Surprise is being tested in a pilot programme at several of the Group s businesses. This survey is being used to collect and analyse all new employees perceptions of their new employer, and the recruitment and integration process (including orientation and training). Encouraging employee mobility Employee mobility within the Group, internally and inter-company, is a means of widening their skills and encouraging the transfer of know-how. The internal mobility programme Mouvy contributes to this goal. It is set up to encourage open discussions with employees and to facilitate utilisation by the recruiters. The website gets an average of 64,000 visits a month, with about 1,300 job offers. > Developing everyone s skills The Group invests about 60 million in training, almost 7% of the total salary base, of which 4.4% is voluntary expenditure. This investment plays a major role in the development of the technical and managerial performance of our employees. 30 I Groupama 2005 Annual Report

37 WHAT DO I EXPECT FROM MY INSURER? THAT HE OFFERS ME SOLUTIONS SO THAT I DON T HAVE TO WORRY ABOUT MY RETIREMENT.

38 The driving forces behind our success Human Resources Human Resources, the foundation of the Group s ambitions The Mouvy intranet site is also extensively used to support organisational changes in the Group s businesses by facilitating mobility and professional reclassification. In addition to functional and geographic mobility within each of the businesses (between 5% and 8% of employees), almost 200 employees had the opportunity to transfer to another of the Group s businesses. The identification and development of high potential employees is a major goal. In conjunction with the growth in its international activities, the Group is strengthening its recruitment models and preparing to move managers abroad. The Wide angle lens on the World programme provides both the businesses and the employees with optimised conditions for new positions. It offers an introduction to the host country, language instruction, reconnaissance trips, and administrative assistance to potential expatriates. This same model helps to prepare for re-entry and job reassignments. The Group s businesses perform their training functions with the support of the expertise of the Groupama Training Centre, the specialist divisions and the functional departments of Groupama S.A. Backed by the experience and investments already carried out (including the on-line training programme and the CD-Rom self-training guide), E-training is used by the Group as a way of addressing constraints on the availability of employees and their physical locations. Training opportunities were substantially enhanced in 2005, with new programmes on topics including retirement, salary savings, financial market functions, and the fight against money laundering. These offerings were complemented by sales training tools, particularly for life insurance; this programme alone has allowed us to train 2,500 employees in off-site locations. In addition to enhancing marketing efficiency by mastering management tools for customer relations and sales, there were four national initiatives implemented under the Groupama name in 2005 Banking, Banking-Insurance, Health/Provident Savings, and Savings/Retirement. All the marketing managers of the Regional Mutuals were trained in the same sales techniques using the same materials, ensuring a speedy > Lead change with Groupama Tomorrow At the initiative of the Group s Executive Committee, Groupama University has introduced the first round of business seminars designed for all senior managers and directors of the Group (about 1,000 individuals). The goal is to broaden the managers vision of the Group, to recognise its diversity and to understand the changes it is experiencing now and in the future. Groupama Tomorrow is the basic seminar intended to inspire a shared dynamic among senior managers and directors, encouraging them to act in concert and initiate joint Group projects. Groupama Tomorrow also aims to strengthen loyalty and commitment to the Group. The ten sessions held in 2005 attracted great support from the participants. Twenty other sessions are planned for I Groupama 2005 Annual Report

39 and coordinated dissemination of product expertise throughout the marketing teams. To strengthen the professionalism of management practices, the Group also enhanced its Mission Manager programme, which is designed for high potential managers in the Group s businesses. Since 2006 this new curriculum has resulted in a BADGE (Bilan d Aptitude Délivré par les Grandes Écoles Aptitude certificate issued by the top universities) training designation being awarded by the Commission des Grandes Écoles. Mission Manager also became the entry point for a STEGE equivalence certificate (Stage d Entraînement à la Gestion d Entreprise Business Management Training Programme) in General Management, offered by ESCP-EAP, the partner of Groupama s Training Centre. Training tomorrow s leaders The Group s future success depends upon the commitment of its managers to confront the strategic, economic, and marketing challenges ahead. The identification and development of high potential employees is a major goal and a way to prepare for the future through the key positions in the Group. Continuing the Groupama Talents programme, the Group: implemented a programme using career committees to steer the careers of senior managers and directors and guide the appointment process. This project also aims to provide senior managers with highly motivating career options; also tested a method for identifying and conveying managerial best practices. Since 2003, Groupama University has been broadening its activities, encouraging the communication and sharing of skills among senior managers, focusing especially on three areas: adapting the Formation Supérieure des Managers (Advanced Manager Training) programme, which is organised and run in partnership with ESSEC, and offered every second year; offering starter training programmes ( 1 Evening/1 Day ) on management topics, and Focus on a individual business, as well as conferences led by experts, university professors and business leaders. The dedicated intranet site in turn makes a great deal of high value-added information on the Group and its business available to management; introducing the corporate seminar Groupama Tomorrow (see the frame below). Steering and energising work methods Successful implementation of major projects requires the development of shared initiatives, processes and tools to maximise the results of future activities. To achieve this objective: the Human Resource directors of the Group s businesses share information, direct projects, exchange views on best business practice, conduct performance assessments and design and share management tools at Human Resources Operating Committee meetings; four networks connect the business managers responsible for recruitment/ mobility, training, internal communication, and personnel information systems, spelling out methods for implementing techniques and sharing tools. Within this framework of cooperation and exchange, the Group conducted a number of projects in These included simplification of the remuneration system for employees under the UDSG (Union de Développement Social Groupama the Groupama Social Development Union) statute; the professional advancement of handicapped employees; preparation of employee savings mechanisms; efficient investments in training; and the implementation of reforms in professional training (shared training plans, and information packages for managers on Individual Training Rights.) The Group s Information and Steering System was built to support priority tasks, direct and assess the effectiveness of policies, and perform internal and external comparative performance studies for the Human Resources division. In 2005 this system provided reliable human resources data based on management guidelines which are shared by all the insurance businesses in France (80% of employees). With further development in 2006, the system will cover all the Group s businesses in In additions, shared e-project tools are being put into place to facilitate the management and staffing of projects involving managers and teams in different geographic locations. Groupama 2005 Annual Report I 33

40 The driving forces behind our success Human Resources Human Resources, the foundation of the Group s ambitions Partnering change with dialogue and internal communications The Group is currently living through multiple changes: the final stages of the regrouping of regional businesses, the modernisation of the Group s corporate governance, new marketing organisations, migrations in information systems, and the opening of its capital. These changes have stimulated employee dialogue at all levels. The shared objectives of all those concerned in this dialogue is to allow all employees to understand their place and fully exercise their roles and skills in the business. Negotiations in connection with regroupings and business plans resulted in the appropriate amendments to employee regulations (ARTT, functions of personnel representative authorities, CET, etc.). In the area of general salary policy, the Group s businesses have put increasing emphasis on profit sharing and salary savings programmes, which provide a closer connection between employees and our economic and financial results. All our businesses now have such a programme. In addition, there was an important agreement signed on 15 September 2005 by the Union de Développement Social Groupama (UDSG Groupama Social Development Union) and the representative Union Organisations, which simplified pay structures and growth mechanisms for mutual businesses. This new structure, which is easier to understand, establishes minimum starting salaries at an attractive level in market terms. A new Comité Central d Entreprise (CCE Central Company Committee) was set up to reflect the Group s organisation. The committee was created in recognition of the Unité Économique et Sociale (UES Social and Economic Unity body) among Groupama S.A., Gan Assurances, Gan Eurocourtage, Gan Prévoyance, Gan Patrimoine, Groupama Systèmes d Information and Groupama Logistique. The Group Committee met 2 times to examine the 2004 consolidated financial statements, the regrouping of the regional businesses and plans for acquisitions. During these two meetings, the Comité d Entreprise Européen (European Business Committee) examined the report describing the business growth and assessing the outlook for the Group both domestically and internationally. Status reports on the purchase of the UK company Clinicare and acquisition plans in Italy and Turkey were also prepared. Turning point in our dialogue with employees at year-end 2005 The CE and CCE of the 15 businesses in the consultation Group (the Regional Mutuals, Groupama S.A. and its subsidiaries) have already given their views on Phase 1 of the project to open the company s capital, which was ratified by the decision of the General Assembly of the Groupama National Federation on 24 February The discussions during these meetings allowed the opening of the capital to be perceived as a means, rather than an end in itself, and emphasised the importance of this strategic project. The expert s report, which was requested by the Group Committee and accepted by General Management, contributed to discussions amongst all the parties concerned. Throughout 2005, Kiosque (the Intranet group) and Odyssée (the Group s house magazine) spelled out the meaning, the stakes, and the phases of the capital opening project, complementing other internal Group communications with employees in each firm. The topics covered in these publications (including the insurance market, economic performance indicators, and marketing developments), together with the documentary data available, allowed our businesses to assess the Group s economic and financial performance against the backdrop of the overall business environment. Groupama has strengthened its commitment to employ the handicapped: see the table of social information on page 109 of the Financial Report, Combined Accounts and on page 107 of the Financial Report, Consolidated Accounts of Groupama S.A. 34 I Groupama 2005 Annual Report

41 The driving forces behind our success Human Resources Key data and detailed breakdown Change in employees Total salaried employees 29,391 29,332 29,375 - In France 26,203 26,539 26,628 - Outside France 3,188 2,793 2,747 Distribution networks in France (Regional Mutuals and subsidiaries) - sales force 9,179 9,371 9,356 - exclusive agents (1) 2,482 2,372 1,823 - general agents (1) 1,000 1, (1) Non-salaried staff. Totalling 32,190 employees (salaried, and exclusive and general agents). Breakdown of salaried employees in France Companies, business lines, networks Groupama S.A. 1,495 1,518 1,510 Head office and After sales service of the Regional Mutuals 8,160 8,167 7,962 Sales force of the Regional Mutuals (excluding exclusive agents) 6,958 7,089 7,192 Head office and After sales service of subsidiaries with overall customer/network relationships (2) 3,595 3,655 3,790 Sales forces of the subsidiaries with overall customer/network relationships (2) 2,221 2,283 2,093 Insurance/banking and related services subsidiaries in France 1,032 1,104 1,130 of which Groupama Banque Financial and real estate subsidiaries Business line support functions (IT, logistics) 2,016 2,031 2,029 Geographic breakdown Regions 65% 67% Paris 24% 22.5% Abroad 11% 10.5% Gender breakdown Women 57% 57% 58% Men 43% 43% 42% Recruitment External recruitment, permanent staff 1,809 1,836 1,954 of which permanent staff under 26 years old (2) Gan Assurances, Gan Eurocourtage, Gan Patrimoine, Gan Prévoyance, Groupama Transport. Groupama 2005 Annual Report I 35

42 The driving forces behind our success Information technology Information technology systems serving the Group The second phase of the Information Technology Plan ( ) was launched in 2005 its key feature was GIE Groupama Information Systems (SI). We achieved our principal objectives in 2005 in the areas of cost reduction and made progress in major strategic programmes (including convergence of computer systems, introduction of Groupama Banque, implementation of the GRC and the target health system, and the migration of Gan Assurances into the Group s non-life back office). We also set up an information technology governance system to effectively organise the alignment of action plans for the strategic and operating priorities of the Group s entities. Three other GIEs (CIRSO, IG3M, CIBAMA), which manage information for some Regional Mutuals, took part in the implementation of this Information Technology Plan. Cost reduction is ongoing The cost reduction programme initiated in 2002 for Groupama SI companies is bearing fruit. Following savings of 15 million achieved between 2003 and 2004 within the Information Technology Plan, additional savings of 7 million were posted in Groupama SI continued to reduce its structural and operating costs. Investments are continuing at a high level to allow the Group to continue to implement projects allied to its strategy; exceptional investments totalling 31 million were directed towards financial programmes and the regrouping of the Regional Mutuals. During 2006, Groupama SI will continue to pursue its rationalisation policy to respond to the Group s profitability requirements, and it anticipates additional savings of 10 million over 2005 levels. In addition, the reformed budget process adopted by the Group will provide a multiyear overview more closely aligned with the operational and strategic planning process. To give decision makers better control, all information technology system operating costs will be clearly distinguished from investment costs, which are tied to the introduction of new information technology projects. Contributions to the Group s businesses > Non-life: streamlining the Regional Mutuals systems In the non-life business, the first two information technology system mergers for the Regional Mutuals (for Groupama Rhône- Alpes Auvergne and Groupama d Oc) were carried out within the expected timeframes and quality parameters. Two new migration and migration/merger projects were launched in 2005 at Groupama Centre-Atlantique and Groupama Centre- Manche. Including the Groupama Paris Val de Loire and the Groupama d Oc projects, there are a total of four projects of this type > Groupama S.A. listens to its users For the second consecutive year, Groupama S.A. carried out a customer satisfaction survey with the help of a specialised company. It covered a representative selection of a thousand users of Groupama S.A. and its subsidiaries. A more in-depth study was also conducted with 40 office correspondents of Groupama S.A. The level of satisfaction in the general study was 6.09 out of 10, a slight improvement compared to Positive points were brought to light, including workplace quality (attributable to the office redesigns underway in the Group), the responsiveness and competence of the information technologists, and the handling of problems by SVP Informatique. Areas for improvement were also uncovered and set the direction for 2006 action plans. 36 I Groupama 2005 Annual Report

43 that will be carried out simultaneously, scheduled for completion in Work on non-life and health back office applications for the Regional Mutuals will continue in 2006, this is intended to set standards for the production and management of shared data. > A single back office for Health, Group Insurance and Individual Life In the Health sector, the key AVT system, which was selected to manage the Group s health offerings and services, took on management of services at Groupama Centre- Atlantique. In the group insurance segment, the Regional Mutuals took the first step towards adopting Collectives, a key management system for provident savings and health products. We completed the initial production phase of the convergence programme Accapulco. New installations of this key system are planned for In Individual Life, two products are under study to rationalise the back offices of Gan Assurances Vie, Gan Patrimoine, Gan Prévoyance and Groupama Vie. This major project, which has an impact on the savings, retirement and provident savings businesses, was introduced in the beginning of 2006, after the software solution was selected. > GRC and sales tools: improved response to customer needs In Distribution, the year was marked by the deployment of the shared tool Gestion de la Relation Client (GRC Customer Relations Management) for the mobile terminals of Gan Prévoyance, as well as the sales tool Isiclic Vie for the terminals of the 2000 sales-people of the Regional Mutuals and Gan Patrimoine. Isiclic Vie facilitates the distribution of PERP Fillon as well as 10 other Life products. Work is also underway to institute a Non-life sales tool, Isiclic IA. The implementation of GRC throughout the mobile marketing network will continue in 2006, together with the implementation of high productivity functions (including marketing campaigns and customer relations platforms with telephone connections). > Steering and Accounting: ready for tomorrow Actions taken in connection with the capital opening project resulted in a significant reduction in the Group s reporting timetable in These improvements will continue in At the same time, Groupama SI will continue to work on bringing the Group s accounting systems into conformity with the new international standards. Optimisation of accounting procedures and processing is continuing at Gan Assurances, Gan Prévoyance, Groupama SI and Groupama S.A. with the deployment of SAP software. The key tool for steering strategy, business by business, enlarged its scope: 11 of the Group s 20 businesses were integrated into it at the beginning of Dynamic progress allied to a business plan Groupama SI has entered into a consolidation phase with the second stage of its strategic plan. A new business plan was launched at the beginning of 2005 to combine all the improvements designed to meet the needs of Group entities and consolidate GIE functions. This strategy has produced numerous improvements, particularly in service quality and infrastructure performance. > Service quality is improving on all fronts Groupama SI improved the quality of the service provided to its customers in several areas during Time for resolving office problems was significantly reduced. The reliability of office servers and availably of access to applications improved. GIE also improved its communications by delivery of a daily bulletin to the Group s principals. Service quality will remain a priority in > Enhanced and secure infrastructure development From the workplace to the telecommunications network, inter-locking projects have significantly enhanced our shared information technology infrastructure. 6,500 workplace stations were replaced under the Office Refurbishment Programme. In addition, the new National Group Network provides an efficient, speedy communications tool to Groupama and Gan points of sale. This network can respond to additional requirements using tapes and data exchange. It will be optimised further for the sales force in Improving data protection was also a priority in Simulations of business recovery in the event of a major disaster were carried out. Depending on the gravity of the situation, two scenarios were envisaged. The first was restoration of business on the same site using other equipment, which would be visible to the user. In the second case, activities would be resumed at a remote site. These simulation exercises resulted in major consolidation of the Group s security applications during Groupama 2005 Annual Report I 37

44 The driving forces behind our success Information technology Information technology systems serving the Group Finally, operating procedures for information technology systems will be improved in 2006 and brought into alignment with the ITIL quality standards. Changes in governance The establishment of a joint governance body bringing together entities and businesses resulted in significant improvements in information technology functions since The new Group bodies put in place in 2004 demonstrate the integration of the information technology sector in Operating Business Committees (COMOP), which are responsible for acting on the strategic guidelines laid out by the Group Executive Committee. The Information Technology Operating Committee, which includes the Group s information technology directors, completes this governance mechanism. It examines questions relating to technical streamlining of information systems and the coordination of infrastructures and major technologies, as well as the reliability and security of the information technology systems. In addition, the eight Area Committees, which include information technology representatives and principals, are responsible for investments, business by business. They supervise the alignment of information technology choices with the Group s priority businesses. In conclusion, Groupama SI s 11 internal commissions, three of which were created in 2005, will define and manage business priorities. > Contribution to environmental and social goals Groupama SI increased its recycling of obsolete materials in 2005 in partnership with a specialised company. 55 tonnes of material were treated; reusable metals were separated to be sold and those materials that could not be recycled were properly disposed of. In accordance with the Group s principles, GIE contributed to the integration of everyone in the company by continuing its partnership with the Fondation Groupama pour la santé (the Groupama Health Foundation). An agreement to donate an annual gift of a hundred retired from service computers to sick children was signed for 2005 and At the request of the Health Foundation, Groupama SI also will bring up an internet site in mid 2005 that is accessible to blind and sightimpaired individuals in accordance with the official French accessibility standards known as Accessiweb. 38 I Groupama 2005 Annual Report

45 The driving forces behind our success The networks Diversified local networks The Regional Mutuals (1) : accelerated life and health insurance growth, stability in property insurance. The Regional Mutuals earned premium income from life and health insurance of 3.06 billion, up 8.2% compared with the prior year. In bodily injury, it posted an increase of 7.3% to 1.3 billion, owing to rate increases as well as portfolio growth. The Health business rose 7.9%, due to high productivity (a net gain of 15,000 policies in Individual Health) and the Unforeseen events portfolio was up 31%. Life business from the Regional Mutuals produced premium income of 1.8 billion, a 9% increase compared to This increase was primarily due to strong performance in the savings sector. Marketing activities demonstrated the responsiveness of the networks, particularly during the innovative national campaign at year-end (Plein Épargne), which triggered demand for unit-linked accounts (+110%). New production in individual retirement savings increased 9.3% in Group insurance also posted a 13.1% increase in business. In property damage, the Regional Mutuals posted stable premium income of 3.05 billion. In the motor sector, premiums fell ( 3.5%) due to a decline in rates. A campaign for new growth has been launched, benefiting from the national Mobilidays campaign (43,000 sales of auto policies and 5,400 related financing contracts); this campaign will be repeated in After a decline in 2004, fire premium income rose 2.3%. To strengthen its position in the agricultural professional risk market, the Group successfully launched a multi-risk climate insurance, which resulted in sales of 56,000 new policies. In response to a deliberate portfolio adjustment policy, the premium income from heavy industrial risk dropped 3.9%. (1) 6,112million Contribution to the combined premium income of the Group (1) 236 million Contribution to the net combined income of the Group (1) including Groupama Vie. > Consultation with our members 2005 was the year of the major customer satisfaction survey which occurs every two years. 21,411 Groupama members gave their opinions on their overall relationship with their insurers by completing the satisfaction survey questionnaire sent to them. In addition to a general satisfaction level of 90%, numerous indicators were analysed and put into perspective by comparing the last two surveys. The results were encouraging. Members appreciated their insurance mutual, especially the proximity and availability of their contacts there. However, they would like to receive more new insurance product offerings. Those who had made a claim were very satisfied with its handling: personalised service, quick turnaround and sound management were key factors in the high level of satisfaction. This is also confirmed by the more specialised surveys carried out following actual claims. More than 50,000 motor or home claims played a role in determining the perceived quality of the Regional Mutuals handling of claims in The survey covered the process from claim to payment, through the adjustment process and the repairs. New services such as Auto Presto are being received with great satisfaction. Groupama 2005 Annual Report I 39

46 The driving forces behind our success The networks Diversified local networks 2,281million Contribution to the Group s premium income 44million Contribution to the Group s net profit Gan Assurances: growth in life and non-life With 1,000 general insurance agents, 2,000 agency staff and 330 representatives, Gan Assurance is the 5 th largest network of insurance agents in France, serving 1.5 million customers. This network s activities are supported by 2,360 salaried employees in 6 regional divisions and the headquarters. As part of the Group s multidistribution policy, Gan Assurances continued its growth in 2005, with total premium income of 2,281 million, up 3% over the prior year. Overall, property damage business from the agents network posted a rise of 3.2% in 2005, in the professional and individual markets, as well as businesses and institutions. The motor, home, and professional and business risks categories posted growth of over 3 points (3.2%, 4.1%. 3.8% and 5.2% respectively). There was also a favourable trend in life and health insurance, which had growth of 2.8% in premium income, with 3.6% growth in individual life and 1.1% in group life. The excellent results from individual savings (+19.5%) were spurred by an intensification of marketing by the agencies of Gan Epargne Energie, Gan Assurances mass-market savings product, and by a new sales initiative by insurance agents and representatives for multi-support solutions in the Chromatys product line. The individual health sector continued to progress (+5%), as did group health (+6.5%). These results were spurred by the Esprit de famille national marketing campaign for life and health insurance. Almost 35,000 policies were written in this area by agency employees and representatives. In 2005, Gan Assurances continued with its implementation of a Business Plan, which our insurance agents embraced enthusiastically (over 86%). 100% of the agencies made use of Gan Souscription services in the regions as well as underwritings from headquarters, which is active in providing technical support to the network. Similarly, 60% of the agencies and their customers took advantage of Gan Services to manage large scale claims, as well as Gan Fil for the excess and overflow requests received from the agencies. More than 650,000 customer requests and almost 75,000 claims files were handled on behalf of the agencies in The establishment of Customer Relations Centres will be continued in Gan Assurances is committed to developing innovative product and service offerings, particularly to support the next phase of globalisation in both the life and nonlife sectors, and to encourage customer loyalty. Gan Assurances is clearly a network with expertise in business risks and needs, particularly for small and medium size businesses, and for all types of professionals, including tradesmen, merchants, selfemployed professionals and farmers. New health/provident savings products and Article 39 contribution and retirement offerings have been added to the range of life insurance solutions. The success of the Omnipro policies is also evidence of the company s incontestable expertise; these provide multi-risk professional coverage and are offered in the context of an overall effort to meet the needs of tradesmen, merchants and self-employed professionals, together with Globalys, a multi-risk insurance for businesses. Gan Assurances was hailed by professional customers in a customer satisfaction survey: 87% were satisfied with the services provided by their insurance agent. For individuals, the full range of motor, home, health, provident savings and savings offerings was strengthened with new product offerings. 40 I Groupama 2005 Annual Report

47 Gan Eurocourtage: growth in the individual and professional segments, progress in group insurance Gan Eurocourtage posted premium income in property and liability insurance of 747 million, down 4.1% compared to the year The growth in group products, particularly in the motor sector, had a very favourable impact on the private individuals and professional segment, where premium income was up 8.9%. In November 2005, the new Gan Horizon Auto product was successfully introduced. There was also a further increase in utilisation of Gan e-courtage during the year (1,000 regular brokers are online), and new functions for product management and new data exchange services were implemented. As of December 2005, over 90% of new motor and home business was subscribed under Gan e-courtage. The drop in premium income is largely attributable to a contraction in the corporate segment, resulting from rate pressures for industrial risks and automotive fleets. Gan Eurocourtage, a multi-line insurer, intends to become leader in several major economic areas, strengthening its expertise and image. Target markets include tourism, energy, waste management and audiovisual professionals. The company s portfolio of almost 17,000 customers provides a good level of profitability, due to a highly focussed subscription policy, regular audits and close monitoring of the financial condition of insured businesses. These strategies produced favourable operating results in Gan Eurocourtages s premium income from group insurance grew 4.6% to 591 million. In the Large Company segment, ( made to measure policies), we were confronted with exceptionally aggressive market conditions, and marketing activities were particularly focussed on the provident savings and health areas. In addition, Gan Eurocourtage will strengthen its emphasis on becoming a more aggressive player in the growing market for savings and retirement. In the small and medium company segment, Gan Eurocourtage increased its market penetration in 2005 and obtained recognition of its ability to adapt in reaction to the provident savings agreements. In conclusion, 2005 was the year of the launch of the offer MCPS (Maîtrise des coûts de protection sociale Social welfare cost control) which our brokers are well aware of. Gan Patrimoine: Successful redeployment of business towards life insurance There was a revival in Gan Patrimoine s marketing activities in 2005, and premium income increased 5.7% to 573 million. Premium income rose 10.8% over 2004 levels. The company s aggressive strategy produced a new spirit of dynamism in its distribution network and put it in a position to exceed target goals. The marketing department introduced an ambitious project to transform its network, which will continue in This marked improvement in premium income is especially significant in the context of the reorientation of activities linked to capitalisation, in accordance with our stated objectives. The project to increase the number of payments planned (which will gradually replace periodic premiums) has been successful, with a 66% volume and 71% value increase between 2004 and In our effort to get a better grip on costs, we initiated two major projects in 2005 aimed at reducing longer-term expenditure. Last June, the company implemented a new management organisation with the goals of increasing productivity and further improving service quality. The migration of Gan Patrimoine s information technology 1,358million Contribution to the Group s premium income 81million Contribution to the Group s net income 573million Contribution to Group premium income 23million Contribution to the Group s net income Groupama 2005 Annual Report I 41

48 The driving forces behind our success The networks Diversified local networks system to Groupama SI occurred in October, and should allow the reduction of recurrent information technology expenses through the sharing of infrastructure and resources also saw the second consecutive year of increases in the mathematical provisions, up 82 million. Units of account represent 20.8% of the mathematical provisions at year-end At the beginning of 2006, Gan Patrimoine introduced a new unitlinked product, Gan Patrimoine Stratégies. The provident sector will seek to continue the growth begun in customer service through ever greater local presence. This presence, combined with the use of better performing information technology tools and products adapted to customer needs, made a major contribution to enhancing customer loyalty. The number of provident savings advisors continued to grow, reaching 1,200 in million Contribution to the Group s premium income 22million Contribution to the Group s net income Gan Prévoyance: growth driven by retirement and health Premium income totalled 454 million against 432 million in 2004, a 5.1% increase, mostly due to the success of retirement products and periodic premium savings policies. The premium income in the health sector has undergone major growth (+55%). Gan Prévoyance, which specialises in the development and distribution of provident savings, retirement, savings and individual health products for private individuals, also expanded in the non-salaried workers market, following the directives of its strategic plan. Non-salaried workers represented almost 20% of premiums received and 13.5% of new business in volume as of yearend The marketing network arranged conferences in partnership with professional organisations in a number of pilot regions. In 2005, Gan Prévoyance marketed the new provident savings product Gan Prévoyance Famille. This policy, which is targeted at private individuals, is designed to protect the entire family and includes two new types of cover (post-hospital care and unforeseen event cover). Our efforts to develop and make use of the network continued, allowing us to strengthen 42 I Groupama 2005 Annual Report

49 FOR ME, IT IS IMPORTANT TO KNOW THAT I CAN COUNT ON PEOPLE WHO KNOW AGRICULTURAL AND ITS NEEDS.

50 Our activities

51 Insurance, Banking and Services in France p.46 International and Overseas Activities p.70 Financial Activities p was an excellent year for Groupama. It made major progress, as demonstrated by a 4.8% growth in premium income to 13.5 billion, and most importantly by its 36.2% improvement in operating income, which was slightly over a billion euros, and its net income of 544 million, up 34% compared to These results reflect the performance of all the Group s companies, and demonstrate the soundness of its strategy in the context of the business environment and the goals of the Group. Groupama 2005 Annual Report I 45

52 Our activities Insurance, Banking and Services in France Life and health insurance Individual health Provident savings, retirement, individual life insurance Group insurance and employee savings plan Banking products Personal Banking The total contribution of Insurance/Banking activities and Services in France in 2005 was: 519 million Group accounts 373 million Groupama S.A. consolidated accounts Property and liability insurance and services Everyday motor insurance Everyday home insurance Services (assistance, remote property surveillance, legal protection) Agricultural insurance professional agricultural risks Professional insurance Business and institutional insurance Marine and transport insurance Groupama is pursuing its policy of innovative offerings in products and services. Groupama has conducted numerous large scale national marketing campaigns on the themes of banking, motor insurance and car loans, health and provident, and savings programmes to promote dynamic growth.

53 Our activities Insurance, Banking and Services in France > Life and health insurance Individual health insurance Groupama is number 1 in individual health insurance and has chosen to intensify its marketing activities by combining quality services and cost controls in an environment rendered unstable by the effect of health insurance reforms. Like all the other insurers active in the medical area, Groupama usually finds itself in the situation of the blind payer, as consumption of medical services continues to increase. The Group has therefore decided to support the medical reform programme by linking health professionals and policy holders in a search for ways to improve the system and achieve the best equilibrium between quality care and health cost outlays. This objective will be achieved by identifying best practice, encouraging preventive health measures, and distributing easily understood information concerning the health care sector and its organisation. Mobilisation to reform health insurance The Group has decided to participate in the health care reform whose guiding principles were established by the Law of 13 August By more closely involving supplementary health care insurers in the control of health insurance, this reform actually encourages Groupama to take an active role in decisions regarding the health coverage of its members and customers. By emphasising the responsibility of all the entities playing a role in the health sector, (health insurers, health professionals, and policy holders), the reforms also support values that are very important to the Group s philosophy. Implementation of the reforms was phased in during 2005 through the publication (frequently delayed) of applicable directives. Analysis of these texts and their interpretation gave strong impetus to Groupama; we anticipated various key measures applicable from 1 January 2006, including the implementation of responsible policies. If it is to be effectively carried out, this reform package will have to be accepted and fully understood by policy holders. Groupama is committed to communicating the causes and consequences of the reforms to its members and customers through a wide range of media, including mail, press publications and telephonic reply scripts. National communication campaigns Our first national Health-Provident campaign, which was targeted at younger households in the age range, was launched in September. It mobilised the entire network of Regional Mutuals (4,000 sales people), all with the same message. This national initiative was an opportunity to promote Groupama Santé Active, Groupama s other health product offering. This campaign was successful, producing results that came in above expected sales targets. Groupama 2005 Annual Report I 47

54 Our activities Insurance, Banking and Services in France > Life and health insurance Individual health insurance With 242,500 beneficiaries, an increase of 21.1% over 2004, Groupama Santé Active is going full steam ahead. This modular product can be adapted to the individual situation of each family. It offers higher reimbursements for optical and dental care, reimbursements for preventive services which are not covered by compulsory health insurance schemes, a third party payer system, and service standards which are up to policy holders expectations (including making reimbursements within 48 hours, and handling hospitalisation within an hour). For the second consecutive year, Groupama Santé Active received an award for Excellence from Dossiers de l Épargne. give early warning of osteoporosis, vaccines not reimbursed by Social Security but prescribed by paediatricians, and reimbursement for a complete bucco-dental preventative examination. In the same sprit, Groupama is using its various health publications the Groupama Santé Active letter and the Mémo Santé folder to notify customers of life-style risk factors and clarify the medical options available to policy holders. Pursuing innovation It would have been imprudent to make major changes to the existing product line during a year marked by significant reforms. We therefore focussed our innovations in areas not directly affected by the reforms, i.e., hospital admissions: refurbishment of private rooms and new coverage of expenses incurred by those accompanying hospitalised patients. Other innovations strengthened preventive care. To our current list (which includes flu vaccine and colorectal cancer screening) we added bone density assessment to 935 million premium income from supplementary individual health cover, an 8.2% increase > Strategy in action The trusting relationship that Groupama has forged with health care professionals has been strengthened by our renegotiation of pricing grids with opticians. Policy holders of Groupama Santé Active now have full coverage for the lenses of their glasses. In addition, dental surgeons have given us full information on their charges for a range of procedures, allowing us to give better advice to policy holders. Relations with health professionals were also improved in the third party payer category. 48 I Groupama 2005 Annual Report

55 Our activities Insurance, Banking and Services in France > Life and health insurance Individual provident savings, retirement, and life insurance With its top quality product offerings, Groupama is among the foremost players in the life and health markets, particularly in life insurance, retirement and provident savings. During 2005, Groupama continued to adapt its range of products, taking advantage of regulatory changes and the recovery in financial markets. 2.8 billion premium income from Life insurance, 9% increase The life and health insurance market is characterised by strong growth and fierce competition. The Group s goal is to accelerate growth in retirement savings and strengthen its position in individual provident savings, particularly in sectors such as unforeseen event coverage and long term care. We offer customers comprehensive solutions, including provision of services. Regulatory opportunities The Fourgous amendment regarding savings adopted in July 2005 in the framework of the Economic Confidence and Modernisation Law should be seen as an opportunity. Underwriters to a life insurance policy denominated in euros will be able to convert to a unit-linked policy, provided that they invest at least 20% of their savings in unit-linked accounts. This new opportunity, which has no effect on prior taxes, is all the more attractive because the erosion of returns on euro denominated investments is continuing, while returns on unit-linked policies reflect the sound performance of the financial markets. This amendment will contribute to dynamic growth in Groupama s insurance deposits in unit-linked accounts. Several high powered marketing campaigns At the beginning of the year, Groupama Vie launched a promotional campaign with an attractive rate of cover for life insurance policies distributed by the Regional Mutuals. Two marketing campaigns were also launched for individual retirement savings. The first, Esprit de famille, was inaugurated in the spring by Gan Assurances, and was targeted at general insurance customers to encourage them to begin retirement savings. The second was orchestrated by Groupama between November and December as part of the national Plein Épargne campaign. In provident savings, the Regional Mutuals campaign for health and provident savings offered Capital Essentiel as a new feature of Groupama Santé Active. More generally, all the joint campaigns consistently promoted provident savings products in 2005, particularly unforeseen event and funeral coverage, with the goal of increasing our market share with families and senior citizens. Finally, Gan Patrimoine also initiated an offering with an attractive cover rate at the end of 2005; it met with resounding success. Innovations in savings products Groupama Epargne, which received the Trophée d Or 2005 from Revenu for its euro policies, began on 1 November 2005 to offer new annuity products and placed more emphasis on its long term care annuity and double long term care options. It successfully repositioned itself in the market with lower rates and a rate structure that declines with each additional payment. Groupama Epargne Intergénération benefited from the same developments and introduced supplementary and programmed payments, while specifying contribution rules. Groupama Modulation, which received the Mark of Excellence Groupama 2005 Annual Report I 49

56 Our activities Insurance, Banking and Services in France > Life and health insurance Individual provident savings, retirement, and life insurance funds. Gan Patrimoine received the Oscar for life insurance policies in euros for its Libregan product, which was also honoured by Le Revenu with a silver medal in Dossiers de l Épargne, also took advantage of these new developments and offered three new options; the protection of capital gains, the continuing trend of directing euro funds to units of account, and programmed partial buybacks for euro as well as protection of individuals On the occasion of its 60 th anniversary in 2005 Gan Prévoyance, the recognised specialist, introduced a new range of products targeted at families Gan Prévoyance Familles, which combines disability, work stoppage, death, and unforeseen event coverage. Gan Patrimoine has developed partnerships with funeral businesses to strengthen its distribution of these products. The Group sets the standards in the individual provident savings market. Growth was substantial in 2005 in unforeseen events insurance (with 198,000 policies at year end 2005 and premium income up 26% to 30.5 million). In long term care, the Group held the top position in volume of policy holders, who numbered 215,000, contributing premium income of 53.2 million (+3.5%). > Strategy in action million Premium income from Provident savings: 2.8% increase The national Plein Épargne campaign which was rolled out between 14 November and 3 December 2005 was successful. We took in 150 million over the period and 255 million by the end of the year. In addition to the overall growth in deposits, the initiative spurred growth in unit-linked accounts, which rose 110%. Plein Épargne is a multimedia package that offers a euro-denominated fund and a unit-linked account option in the Groupama Modulation framework. The introductory offer included a capital gains protection option free of charge. 50 I Groupama 2005 Annual Report

57 Our activities Insurance, Banking and Services in France > Life and health insurance Group insurance and employee savings schemes The third largest group business measured by premium income, group insurance has experienced sustained growth in health and retirement, while strengthening its leadership position in innovative products, advice and services provided to customers. Groupama Épargne Salariale also offered sound solutions for the concerns of employees and company managers. 1,351 million Premium income, +5.5% 6.33 billion Assets under management for Savings/Retirement, +4.78% A sense of responsibility in health and a wider range of retirement offerings The Group has large ambitions for increasing its group insurance business through Gan Eurocourtage, Gan Assurances and the Regional Mutuals. We listen closely to our business customers, from the very small to the largest, to help them control the costs of their employee benefits and respond to the needs expressed by employees. In the spirit of health insurance reforms implemented by the Parcours de Soins (Care Initiative), Groupama has clearly positioned itself in favour of responsible health offerings. After meticulous preparation, responsible policies were introduced on 1 January Groupama wished to make its distribution networks and its customers fully aware of the necessity of establishing take charge policies, which go beyond responsible policies. Sales scripts were developed aimed at controlling inflationary costs beyond those envisaged in the Parcours de Soins, particularly for Optical and Dental services, which will be more systematically based on estimates provided. In the buoyant retirement market, our high growth strategy based on repositioning and broadening our product offerings continued. After a successful introduction at the end of 2004, the PERE product s range of annuity options was increased to better accommodate the diversity of family situations; there are guaranteed annuities, as well as progressive and reducing annuities. The goal is to allow employees to build up replacement income ahead of their retirement and allow businesses to have the tools to foster employee loyalty. Mobilisation of distribution networks around rewarding products The traditional business of the subsidiaries Gan Assurances Vie and Gan Eurocourtage Vie, group insurance is increasingly a growth area for the Regional Mutuals. They have also successfully brought to market a new range of Synergie Santé products for small and medium size businesses (SME). Following the restructuring of its provident savings, health and retirement product lines, Gan Assurance Vie posted significant additional sales among SMEs and very small businesses for the second consecutive year. In an unprecedently competitive market for major companies, Gan Eurocourtage Vie experienced particularly strong business in provident savings and health and continued its penetration of SME businesses and industries. The mark of excellence granted by Dossiers de l Épargne to the entire range of the Group s provident savings and health products for the SME segments bodes well for continuing progress. An innovative marketing strategy Far from resting on its laurels, the Group launched an innovative marketing programme, segmenting its business customers by buying patterns. The first stage in this programme was carried out by Gan Eurocourtage with a product targeted at SMEs to facilitate their control of employee benefit costs. Its introduction was accompanied by a large scale communication operation with brokers so that they could take advantage of the programme and the product. These efforts were hailed by the broker network for their differentiation features, which were very much in step with the concerns of company managers. Rationalisation of management tools Similarly, the rationalisation of management tools aimed at unifying information systems by business continued during the year. The Group defined Collectives as its key system for all of its entities, as well as Gan and the Regional Mutuals. The core of the Gan Collectives system was retained to serve as the basis of a shared system known as Accapulco. Significant steps in the completion of this important project were completed in They continue in Groupama 2005 Annual Report I 51

58 Our activities Insurance, Banking and Services in France > Life and health insurance Group insurance and employee savings schemes 2006 with the ongoing migration of the portfolios of the Regional Mutuals onto this shared system. Besides optimising maintenance and sales costs, this change facilitated the distribution of innovative products through all the networks. Strong growth in employee savings plans With a favourable legislative environment, particularly evidenced by the profit sharing model for managers of businesses with 1 to 100 employees, whatever their status, employee savings plans have become more than just a financial instrument. They are a human resources management tool and a powerful motivating factor. Whether it involves incentives or profit sharing mechanisms, individual savings assistance by subscription, PEE, PERCO or employee shares, this model provides genuine solutions to the concerns of employees in the context of new social dialogue. The group encourages a broad based approach which allowed it to gain a nearly 5% market share in the number of PERCO policies. With a 35% increase in the number of businesses it serves, Groupama Épargne Salariale has experienced strong growth in the market of very small businesses. them to review their policies and more easily manage their payments. Finally, Groupama Epargne Salariale is increasingly often designated the counterparty in branch or interprofessional joint agreements because of its product known as Comité intersyndical de l épargne salariale (CIES Inter-union Committee on Employee Savings Plans). Group insurance Premium income 1,351 million, +5.5% of which: - Health 35%, - Provident schemes 42%( including monetary losses), - Savings-Retirement 23%; Distribution network: - Gan Eurocourtage 46%, - Gan Assurances 32%, - Regional Mutuals 22%, - Assets under management for Savings/ Retirement: 6.33 billion, +4.78% Employee savings plans 462 million in employee savings under management, up 21%. 7,400 business customers; 91,600 individual accounts. 462 million in employee savings under management, up 21% Innovation is rewarded Groupama Épargne Salariale received the Corbeille Épargne Salariale 2005 from Mieux Vivre Votre Argent. This award, one of several, demonstrated the real recognition of an activity whose management is certified as compliant with ISO standard. Our local networks receive strong training support. As evidence of its ability to anticipate and innovate in long term protection of individuals and property, Groupama Épargne Salariale introduced an option to its PERCO product that protects beneficiaries assets from financial market risk. A Business heading was also opened on the groupama-es.fr internet site with access reserved for customers, to allow 52 I Groupama 2005 Annual Report

59 Our activities Insurance, Banking and Services in France > Banking products Personal Banking In its first three years, Groupama Banque has established operations with performance standards and risk exposure comparable to the market overall. With 275,000 customers as of 31 December 2005, the bank is growing steadily, although at a somewhat slower rate than anticipated. +55,000 new accounts in % increase in income > Strategy in action New products During 2005, Groupama Banque continued to expand its portfolio of customers and increased outstanding credits. At the beginning of the year we introduced Astrea 2 Liberté, a new everyday banking product targeted at customers with a history of savings, who do not yet want a bankers card. In addition, a national media campaign to sell everyday banking solutions resulted in the opening of 28,000 accounts with the Regional Mutuals in the space of just one month. Similarly, the June launch of a product for young people, differentiated by age (16-18 and 18-25) brought in 1,526 new account openings in six months. 275,000 customers in our portfolio As a result of a business cession agreement between Banque Finama and Groupama Banque, almost 39,000 customers transferred their accounts to Groupama Banque, representing million in deposits. As of 31 December, Groupama Banque had a total of 275,000 customers for 189,000 accounts. It had 102 million in demand deposits, up 56% compared to Deposits in Astrea and Astrea 2 Liberté rose 41% to 529 million. The level of business was nevertheless weaker than expected, mostly due to the postponement of Gan Assurances s banking product offering from late 2006 to early 2007, due to significant new information technology investments. Groupama Banque received the Trophée Casques d Or for the best customer telephone relationships, a tribute to the quality of this service. Growth in credits outstanding The growth in outstanding credits continued in 2005, reaching 125 million, up 35% compared to the prior year. The Mobilidays promotional campaign in June, which combined attractive lending rates with advantageous motor insurance, bore fruit with more than 5,000 new loans, 112% more than the number produced by the 2004 campaign. Annual increases in Désirio loans to a total of 9,300 also surpassed the level of the prior year by 25%. In real estate lending, a market with low rates and stiff competition, Groupama Banque elected to develop its own fixed rate product, which will begin to be marketed by the Regional Mutuals in the first half of Stepped-up marketing of banking products. The growth of consumer credit remains a major focus for growth. In coordination with the Regional Mutuals, Groupama Banque has performed studies and tested the possibility of remote sales. The implementation of a tele-servicing centre dedicated to this activity is planned for the second half of 2006, with a broadened range of products. These will include marketing consumer credit to all members, and marketing bankers cards and securities to bank customers. Groupama 2005 Annual Report I 53

60 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Everyday motor insurance In an increasingly competitive market, with downward pressure on rates and increasingly frequent offers of services included with insurance, Groupama is positioning itself as the insurer and banker for conventional motor insurance. As a major player, it is developing a global approach to the mobility need of its customers. A partner every day Motor insurance is a loss leader, and stands out as a well-priced commonsense offer. Groupama is committed to becoming the favourite partner in the daily life of its customers, as both insurer and banker. Its service products are designed to make life easy for its policy holders with a range of policies and coverage that is constantly being enhanced. Zero Kilometre assistance, loan vehicles in the event of breakdown, accident or theft, coverage of mechanical failures and automotive financing are just some examples. In addition to its traditional activities, the Group also offers preferential rates for customers when they rent a vehicle for a move or during holiday travel. Comprehensive product offerings Groupama is pursuing the development of its comprehensive car insurance offerings relying on its three distribution networks. A new 3 Year Purchase Value policy was marketed in In the event of the theft or destruction of a vehicle, whether new or used, this coverage, one of the most comprehensive on the market, allows the policy holder to be reimbursed what was paid for the vehicle, for a period of three years after its purchase date. It is offered with Zero Kilometre Assistance in the motor products direct marketing brochure and in Mobilidays communications. By February, Gan had already undertaken a national campaign. Our strategy of providing everyday motor insurance will continue in 2006 with new services, including making vehicles of the same category available in the event of breakdown. Auto Presto by CapsAuto 85,300 policy holders called on the services of Auto Presto to repair their vehicles in This service, which Groupama introduced in 2002, continues to attract customers and reports a 94% level of client satisfaction. It is based on the loan of a vehicle, and covers all the repair work up to and including delivery of the repaired vehicle to the policy holder s residence. With 740 partners, this sector registered a 27% growth. CapsAuto (formerly Motorcare), Groupama s wholly owned subsidiary, manages this service in France and is constantly striving to improve service quality. In addition, 88 Rent-a-car locations were installed in the CapsAuto network in just one year. 54 I Groupama 2005 Annual Report

61 The ongoing struggle to improve road safety Groupama has long been committed to accident prevention measures and has focused on ongoing driver education in 2005, offering new services targeted at improving road safety. Our Centaure centres assisted these efforts in accordance with the government s policy promoting the reduction of road deaths and casualties. These activities thus complemented the campaigns for limiting speeds and alcohol consumption while driving. Centaure s territorial coverage will increase with the opening of two new sites in 2006 (in St- Paul lès Dax and in Lorraine). To be noted: Growth at the Ile-de-France centre and the overall increase in training for the general public. Training sessions for recovering lost points alone grew about 6%. 41,771 individuals received instruction in Our pattern of claims was comparable to that of the market overall, with a decline in the frequency of property and bodily injury claims. On the other hand, although the costs for property claims remained stable, those for bodily injury rose significantly. Accidents were less frequent, but more severe. +35,000 more private cars insured > Strategy in action As of 14 March 2005, CapsAuto has been the new name for Motorcare. This name change went along with in-depth development of this business, which runs the Auto Presto service. Starting as a simple accident manager in a network, it has become, with Groupama s support, a genuine motor services company involved in insurance and vehicle repairs. This development demonstrates the Group s ability to offer ever more varied services and implement significant growth initiatives. With an effective information technology system, this business is taking on a growing number of functions, while reducing the average time required to handle files and make payments to repair service providers. Cars insured by the Group: 3,665,000 vehicles, excluding fleets 1.46 billion in premium income, excluding fleets and motorcycles, 1.7% 10% market share (estimated) Groupama 2005 Annual Report I 55

62 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Everyday home insurance With overall growth in the number of homes to be insured, Groupama has elected to position itself in home insurance with extensive product offerings that provide ever more comprehensive coverage. In addition to insurance, these include prevention, legal protection, and property and personal assistance, as well as a broad range of services. New growth opportunities lie ahead for the Group in the area of everyday home insurance. A supportive approach With a 12% market share, the Group produced premium income of million, up 4.5%. Although this increase is in part attributable to an increase in the FFB index at the beginning of the year, these results once again support Groupama s position as an insurance and banking partner, with a daily presence in the lives of our policy holders. Faced with increasing competition from new players, especially bank/insurance groups, Groupama continues to offer coverage that extends beyond accidents, with the goal of satisfying the needs of its customers with the quality standards they expect. Products with significant added value We continued the development of our Aide à la vie quotidienne (Everyday Assistance programme), which combines Allô Travaux, Legal Information and Everyday Assistance. Legal protection was expanded to encompass new areas, including work law, tax law and inheritance. The new for old coverage continued its strong growth. Along the same lines, the management of in-kind replacement claims provided by our subsidiary France Maintenance Bâtiment, which has been certified in accordance with 2000 ISO 9001 standards, was more frequently called upon by the group s customers (+28%). This product acts through a network of 500 contractors to provide speedy access to a tradesman to carry out work following a claim. In response to another of its customers strongly expressed needs, Groupama has continued its successful remote surveillance of properties. New products have already been introduced in 2006 in the area of everyday services, with offerings for both the resident and the residence, (under the Fourmi Verte brand; see Services ). Banking services have been supplemented with real estate loans. Fire prevention is a priority Fire prevention is a priority for Groupama and was an important theme in Prevention brochures covering the risks relating to electrical installations were prepared, in addition to materials relating to the installation of smoke detection equip- 56 I Groupama 2005 Annual Report

63 ment. We offer a specialised product that combines the installation of smoke detectors with a central surveillance service, which is available to protect homes when they are vacant. These activities reflect the mutual spirit to which Groupama is dedicated. They are aimed at informing and helping members and policy holders to anticipate future regulatory changes. The associated distribution of prevention oriented products to protect homes from theft and protect individuals from private swimming pool accidents continued in The pattern of claims in the homes market was up slightly from 2004, primarily due to the extended cold snap at the beginning of the year and heavy rains in September. Claims however remained at a thoroughly acceptable level. > Strategy in action Groupama Sud, which regularly experiences natural disasters during the autumn months, has perfected an emergency plan designed to profile claim forecasting, anticipate the problems to be addressed, and coordinate the rapid deployment of resources by all its divisions. This plan, which was inaugurated in 2003 and has been enhanced on a continuing basis, was invaluable with the bad weather conditions experienced in September 2005 in several of the departments in its catchment area, particularly Aude, Gard and Hérault. We mobilised our resources to the maximum, deploying in-house and self-employed loss adjustors, marketing advisors, and local elected representatives. The objective: to handle the influx of claims in a minimum time period, expedite adjustors on-site visits and look after our members. The in-house adjustors in some cases made immediate compensation payments on claims. If the evaluation of damage was complex, the adjustor was able to provide a partial advance payment pending determination of final compensation. Almost 5,000 claims were filed by mail or telephone. The carefully targeted organisation for handling such an event proved highly effective million income in multi-risk home insurance premiums, +4.5% 12% market share (estimated) 3,695,000 home policies 2 million income from France Maintenance Bâtiment Groupama 2005 Annual Report I 57

64 Our activities Insurance, Banking and Services in France > Insurance-related services Services Services linked to insurance products have become an essential distinguishing feature of the Group. Groupama s subsidiaries are real testing grounds committed to innovative offers and are leading the market in comprehending changes in society and offering attractive, innovative and competitive services. Assistance in all its diversity Groupama s assistance services support all its businesses: home, health, motor and life insurance, as well as coverage for individuals and businesses. In January 2005, Mutuaide Assistance, the group s dedicated subsidiary, once again demonstrated its expertise when faced with an extraordinary event (repatriation of 600 people following the tsunami). It also demonstrated its strong position in general insurance with premium income of 94 million, a strong 20% increase over and beyond the increase attributable to a change in accounting methods. Technical assistance for cars remained the most significant area of activity. The rerouting of calls for group companies and other customers again experienced a year of strong growth. Assistance to travellers grew in line with the tourism market. Finally, home assistance, the most recent of our assistance offerings, is winning increasing acceptance among consumers. In an entirely different area, Mutuaide Assistance was selected by Amaury Sport to provide medical and assistance services for the next Le Dakar Rallies in 2006, 2007 and Our Extreme Assistance image is thus further enhanced. In conclusion, innovation is at the heart of Mutuaide Assistance s strategy. A concierge service offered to upmarket card customers, allows their holders to access a call centre which acts as a box office for transport and entertainment events, as well as responding to specific requests, such as art objects or luxury items. Introduction of Fourmi Verte The coordinated efforts of Groupama, Familles Rurales and the MSA in the framework of the Borloo plan resulted in a major development in personal services. Fourmi Verte represents the principles of solidarity, responsibility and proximity and aims to respond to all the service needs experienced by families, depending on their age and life style. Offerings include educational support, services promoting independence for the elderly, transportation and routine work projects. Mutuaide Assistance is the platform for the new Fourmi-Verte product line. 58 I Groupama 2005 Annual Report

65 Activeille focuses on investment and sophistication The second largest player in the remote surveillance market, Activeille continues to gain market share with individuals and professionals, generating income of 11.3 million, a tribute to the competence of our teams. We are installing increasingly sophisticated equipment at our sites, and have been successfully selling prevention services to the wine storage market. Several dozen of these policies were written. Présence Verte continues its growth The aging population and the continuing trend to keep the elderly in their homes are major factors contributing to the growth of remote alarms and assistance. With 57,000 subscribers for personal remote alarms and 20,000 for remote property surveillance, the trend continued favourably for Présence Verte, which posted premium income of 3.85 million. After a new call centre was opened in 2004, the comprehensive security operation continued with the award of ISO version certification. Groupama is still a leader in legal protection Groupama continues to maintain its number one position in legal protection. The subsidiary Groupama Protection Juridique has again exceeded the performance of its competitors in a market that is growing strongly overall. This competitive strength is due to proactive positioning with the group s internal and external partners. Groupama Protection Juridique was selected by Sogessur in 2005 to be responsible for the legal protection product distributed by Société Générale. Innovative products, including crisis communication management, were developed for the Regional Mutuals. Finally the SMEs and self-employed workers who are Groupama customers may now benefit from legal protection solutions that include information services available from 9:00 AM until 9:00 PM weekdays and Saturday morning. The introduction of electronic document management has contributed to an improved level of client satisfaction. Assistance 94 million in premium income, with 313,000 files handled > Strategy in action At the conclusion of a competitive bidding process among the leading legal protection companies, Groupama Protection Juridique was selected by Société Générale and Sogessur, its insurance subsidiary, to manage legal disputes and operate the legal information service offered to its individual customers. Our company s expertise and operating methods thus received important recognition. The handling and investigation of litigation is provided by teams of qualified legal advisors, all with specialised knowledge in their particular fields. The legal information team handles 45,000 calls a year, and the claims management team handles 10,000 files. Over 70% of everyday litigation claims are settled amicably. Groupama Protection Juridique 30 million premium income new premiums +16.3% Cash inflow by the Regional Mutuals for legal protection million +2.1% Groupama 2005 Annual Report I 59

66 Our activities Insurance, Banking and Services in France > Professional agricultural risks Agricultural insurance An historic leader in the market for professional agricultural insurance, Groupama remains the foremost insurer in the agricultural world. With a 65% market share, the Group has built its reputation based on the technical quality of its products and the level of its coverage. Its expertise and ability to innovate, year after year, has gained it a privileged position in the world of agriculture. Why we are leaders Groupama was established 100 years ago by and for farmers to cover their risks. Agricultural insurance remains a special area for Groupama. Its expertise and specialist image in the agricultural world have been forged over time, giving the Group uncontested prominence in this highly specialised area. Its size allows the group to maintain and build upon its well recognised technical expertise. The broad range of its products and services covers all the needs of its members. Its specialised sales network is unique in France and relies upon professionals who are constantly in touch with their territories, and with the knowhow to offer solutions adapted to every business need. Finally, its powerful ability to respond rapidly allows it to handle all the unforeseen events of agricultural life, as well as pursue fresh sales opportunities based on new market developments. Our ambition is always to anticipate the future Groupama has always been resolutely forward-looking, striving to anticipate major developments in the agricultural world in order to provide its members with services that meet their expectations. In this spirit, we introduced a new multi-risk climate insurance product in Groupama is currently the only insurer in the market to offer such a comprehensive range. A novel economic approach to risk management makes this product truly unique. If proof is needed, Groupama holds 56,000 of the 60,000 policies written in this market 90% of the total. The product introduction was all the more striking because of the major drought that occurred throughout the summer, which obliged the group to respond very rapidly and capitalise on its expertise in claims adjustment. Almost 10,000 claims were handled over a six 56,000 policies in crop insurance 802 million premium income in Professional agricultural risks 60 I Groupama 2005 Annual Report

67 month period. After ten years of testing and pilot programmes for climate risk insurance, the group demonstrated its ability to provide optimal support to farmers faced with climatic challenges. The Climates product range The range extends from severe blow coverage to optimised climate risk management through its Safety, Essential and Performance products. The purpose of this policy is to cover damage caused on farms to unharvested crops by various climatic hazards, including hail, frost, storms, sun scorch, drought, flooding, excessive temperature or humidity, violent rains, floods, weight of snowfall, sand-storms and heat storms. This product is especially adapted to the diversity of agricultural businesses, whatever the sector and type of crop, the scale of the business, local geographic conditions, or yield. Prevention of agricultural risks In concert with its innovative policies, Groupama has continued and reemphasised its activities in the area of agricultural risk prevention. In our society, the level of expectations in environmental quality, hygiene and safety is high, and there is a tendency to seek out those held responsible for failings. This risk to producers, which can sometimes result in major penalties, represents a growing threat to the continuity of agricultural businesses. Observance of preventive measures and enlightened risk management are the only measures that can limit the potential consequences. As part of its risk prevention and control policy in the area of electricity, Groupama signed a partnership agreement with Promotelec in February. A guide and brochure on electricity entitled Understanding electricity better was published to inform users and respond to their most frequent questions. We did not neglect property protection and also issued a practical guide addressing How to combat malicious damage to agriculture. In 2006 we will continue to consolidate the activities of 2005, both in the insurance sector with our Climats product, and in emerging risks in the area of prevention, particularly with the support of partners. More generally, Groupama will incorporate into its work the changes required by the Agricultural Initiative Law of January > Strategy in action In concert with the introduction of Climats at the Salon de l Agriculture and in the agricultural trade press, the Regional Mutuals led an outstanding national initiative directed at customers involved in large scale agribusinesses. Members who already have hail insurance were offered a combined product combining their traditional hail insurance which addresses frequency risk, with severe blow climatic multi-risk, which covers 13 hazards. With the combination of these two products in a single offering, government subsidies for the climatic multi-risk and an exceptional contribution from Groupama, this combined coverage can be made available at a price equivalent to that of hail insurance alone. Groupama 2005 Annual Report I 61

68 FOR ME, I EXPECT MY INSURER TO TAKE CARE OF PROTECTING MY PRIVATE AND PROFESSIONAL LIFE.

69 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Professionals Tradesmen, shopkeepers, self-employed professionals, service companies and builders all participate directly in the creation of national wealth and play an essential role in our economic life. Like them, the associations are closely tied to their home territories, and are more vibrant than ever. Groupama has strong ambitions to grow in both areas. Partnership with professionals Very small businesses and professionals account for 93% of French businesses and non-salaried workers, a population of 2.7 million. In the important and growing market of self-employed professionals, the Groupama networks are in third place with premium income of 197 million. Professionals expect personalised products with flexibility, as well as a strong relationship. The group s goal is to enhance its market position and become a partner involved at all levels. As part of the Parcours Pro programme covering non-life and life and health insurance, we readied two new marketing campaigns during In 2005, we introduced the new products Groupama Accomplir and Groupama Construire. The first product (see frame) is based on a study of the needs and expectations of professionals outside the construction sector, with the goal of establishing a range of shared Group products to be available through the entire network system. The second product, Groupama Construire, is designed especially for tradesmen and small firms in the construction business. The Ordinance of 8 June 2005 clearly specified the type of construction work for which insurance is obligatory, further strengthening the legal and economic background for this sector. Groupama s strategy of developing a selection of strong and rigorous risk coverage segments to provide complete professional support (non-life and life and health insurance). This strategy must be accompanied by increased emphasis on effective training and specialisation of Group members, which are both facilitated by the establishment of a dedicated internal school, Campus Construction. The building sector s premium income was up 17% to 185 million. 400 million cumulative premium income from multi-risk professionals, associations and construction insurance Groupama 2005 Annual Report I 63

70 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Professionals The dynamic market of trade associations Active in widely diversified areas, associations play a key role in the creation and maintenance of social ties. The association movement is growing ever more important. There were more trade associations created in the last thirty years than there were between 1901 and With 70,000 new associations per year, INSEE (the French statistics agency) estimates that they number a million active players. Their presence is often particularly influential in small communities, which explains why Groupama is a top player in this market with premium income of 18 million. Two policies are specifically designed; for associations themselves; and for their members, both salaried and volunteer. Groupama Affinités is intended for small associations with an inclusive policy offering seven essential coverages and services. Groupama Cohésion, which provides forty-seven types of cover, is intended for large national federations and associations who wish to cover professional or specialised risks. In an increasingly competitive market, the group will capitalise on its resources to offer products adapted to special needs. > Strategy in action Parcours Pro is a comprehensive insurance and services programme whose goal is to penetrate the non-salaried workers segment and generate loyalty. Groupama Accomplir is one of the offerings and was developed to cover 90% of the market. Because each policy holder has differing needs, Groupama Accomplir offers coverage adapted to the specific needs of every sector, taking into consideration the legal status of the business and including a systematic risk prevention programme. The product: - facilitates a joint approach to insuring the individual worker and his activities; - insures a business s liability when it enters into commitments; - protects customers interests by offering very comprehensive legal protection; - protects equipment to ensure that a business can continue operations following a loss; - provides financial protection for the business so that it can restart activities under favourable conditions. 64 I Groupama 2005 Annual Report

71 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Businesses and local authorities Faced with an environment of declining rates, the group has dealt with competition by encouraging closer ties with its customers and members. The largest insurer for institutions and the number 3 for SMEs, it is consolidating its portfolio, based on its fundamental principles of local presence and responsibility, as well as responsiveness. A decision to control and manage growth The decline in premium rates that occurred in 2005 in this market accelerated under competitive pressures, requiring us to rigorously manage our portfolios and pursue dynamic marketing. The portfolio review carried out in 2004 by the Regional Mutuals was completed with the implementation of almost 900 prevention plans. In addition, the joint study initiated in 2004 among the specialists of Gan Assurances, Gan Eurocourtage, Groupama Transport and the Regional Mutuals resulted in the launch of a new product designed for the SME market. Gan Eurocourtage was confronted with very powerful renewed competitive pressures in its traditional markets of industrial and third party liability insurance. It is the third largest insurer for corporate non-life business, and it focussed on maintaining its premium income, using strategies adapted to each of its markets. First and foremost, it continued to diversify its activities by positioning itself in dynamic sectors such as energy, with the objective of becoming leader in several such areas. Its portfolio of almost 17,000 customers offers an attractive level of profitability due to a very closely managed underwriting policy, regular audits, and effective supervision of the financial health of the businesses it insures, supported by more resources and the modernisation of its systems. The Objectif Entreprises project, implemented at the group level, offers the market a new civil liability product, which should support Groupama s growth in its target markets of small and medium business and industry. Supporting local authorities over the long term The urban violence in France during autumn 2005 resulted in costs of about 10 million arising from the insurance policies of local authorities. Groupama s teams, which supported local authorities throughout, again demonstrated their responsiveness. A short time after these events, the 88 th Meeting of Mayors provided the opportunity to exchange views and present the complete range of products and services we offer. With concerns raised by the decentralisation law and the potential deterioration in statutory risks, the Elected representatives personal liability insurance came to the forefront. It covers all aspects of representatives duties and risks incurred. In 2005 the total coverage of local authorities (in property and employee insurance) increased significantly. In 2006, we will introduce two new products covering major risks to local authorities, another sign of Groupama s increasing presence in rural areas and smaller towns. A year of consolidation Premium income totalled 650 million for businesses, 190 million for institutions and 320 million for corporate fleets and local authorities. The group s market share stabilised in a declining market in property damage for businesses, a mostly stable car fleet market and a slight growth in the Groupama 2005 Annual Report I 65

72 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Businesses and local authorities market for third party liability. These variations produced contrasting results. There was growth at Gan Assurances in the ongoing business project, stability for the Regional Mutuals due to their sounder portfolios, and a drop for Gan Eurocourtage, driven primarily by pressure on premiums. Following outstanding performance in 2004, operating results were still very favourable due to a modest level of claims and good results on prior policies. Premium income 1.16 billion premium income from businesses and local authorities. Business market share: 10% to 15% depending on the risks; 30% in the agriculturalfood industry. Local authorities market share: 26% in non-life and 10% in group health and life insurance. Weak growth in the credit insurance market The French credit insurance market showed little growth, due to weak economic growth, which was up only 1.4%, and the loss of export markets. Operating results were acceptable following a reduction in rates. The decline in prices of many agricultural products, caused by the new European Common Agricultural Policy, as well as the crisis in the winemaking sector, put downward pressure on performance in this business line and thus on Groupama s receipts. In another area, Groupama Assurance- Crédit was able to respond to the needs of driving schools, which were required to set up coverage for return of funds with the introduction of a permit costing 1 a day. 1,160 million premium income from businesses and local authorities 27 million premium income from credit insurance > Strategy in action The Specialties marketplace is one of four where Gan Eurocourtage has a position. Combining life and health, property and liability insurance, juxtaposing frequency risk and tailor-made policies, providing niche and mass market offerings, the Specialties department is a source of product innovation and diversification of our activities in developing markets. To support continued growth and ongoing profitability, two new products are being marketed. Cap Pilot Missions has added to its individual accident product range with an offering for businesses with off site employees. Surcotisations Accidents du Travail (supplementary workplace accident product) is innovative in allowing businesses to limit the impact of work accidents on their trading accounts. 66 I Groupama 2005 Annual Report

73 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Marine and transport insurance The world s economy is experiencing increasing globalisation, and the growth in trade is resulting in a rise in freight traffic, particularly air and sea shipments. Insuring ships and airplanes, as well as their cargoes, is at the heart of Groupama Transport business. It is the second largest insurer in the French marine and transport market, and over 45% of its premium income is sourced from its international activities. 300 million premium income, of which 199 million in marine insurance Under the International banner In a highly concentrated world market with just four insurance companies sharing 70% of the business, the strength of Groupama Transport is to combine scale with a human dimension. Relationships of trust and loyalty foster partnerships with policy holders and brokers. These relationships are the basis of our insurance policies, especially in the marine sector. With this solid foundation, we have continued our international growth, implementing our policies of prevention and innovation. Following office openings in Hong Kong, London and Singapore, Groupama Transport opened its new branch in Italy on schedule. It is based in Milan and staffed by a three person team recruited locally. Its mission is to consolidate and develop Groupama Transport s activities in the Italian market, which is 80% of the French market. This local presence is a major asset in gaining a position among shipbuilders, and port and pleasure craft operators, as well as transport managers. This business has also completed its purchase of Assurtrans portfolio, which is specialised in local transport risks in Réunion. A new Groupama Transport entity will soon be created, initially at local level, which will subsequently be extended to a regional level. Despite the exceptional level of claims generated by the Katrina and Rita hurricanes, they had little effect on our business. However, the indirect consequences of these storms may have a severe impact on this sector. Stable aviation business With premium rates steadily eroding, aviation business held steady in Although this sector experienced a series of accidents which were heavily covered by the media, they had little influence on our results. However, the specialised Réunion Aérienne pool in which Groupama participates tightened its selection policy, excluding a certain number of companies from underwriting. The strong rise in premium income is partly attributable to foreign exchange effects and a better than anticipated pattern of claims. Groupama 2005 Annual Report I 67

74 Our activities Insurance, Banking and Services in France > Property and liability insurance and services Marine and transport insurance Transversal plans At the suggestion of the Audit and Actuarial division, Groupama Transport implemented a pilot programme aimed at improving its internal controls. A 10 person task force was organised for this purpose. With the use of specialised software, it worked on outlining all the business s procedures, and then identified the risks and controls so as to create a risks profile and draw up appropriate action plans. This process will be carried out through the all the group s entities, based on what we have learned at Groupama Transport. Net income is higher Groupama Transport s contribution to the group s combined result was 21 million in 2005, up 40.2% from the previous year. The net combined ratio improved, at 91.8%. Similarly, the Optiflux market system, designed to control the technical and financial flows within the coinsurance framework, has been applied more widely. In conclusion, the diversity policy for recruitment efforts has been broadened to create diversified teams including professionals from our customers businesses and insurance experts. This client focus was also demonstrated by our support of managers through training programmes and the implementation of career planning projects. > Strategy in action Committed to its policy of prevention, Groupama Transport participated with Atos Origin in the Predit research programme (a research and innovation programme covering land transport) under the sponsorship of the Minister of Transport. This programme, based on the security and traceability of merchandise, focuses on the implementation of secure and coordinated information systems at every level of the transportation chain to strengthen risk control for theft, assault, substitution, removal and tampering along the logistics line. At the conclusion of this study, a guide especially designed for SME transport managers was prepared, emphasizing the contribution of information technology and communications in making the logistics chain secure. 68 I Groupama 2005 Annual Report

75 WHATEVER HAPPENS TO MY CAR, I CAN STILL TRAVEL. I EXPECT MY INSURER TO OFFER ME ADAPTED SOLUTIONS.

76 Our activities International and Overseas The contribution of international and overseas insurance to the Group s consolidated income was 118 million in 2005, over double the amount in We have completed our campaign to refocus the Group s international network. It is now operating profitably and growing in Groupama s target markets. The countries of southern Europe contribute approximately 70% of Groupama s international premium income. Southern Europe p.67 Other European countries p.74 Central Europe and Turkey p.76 Asia and Overseas p.77

77 Our activities International and Overseas Southern Europe Committed to an aggressive policy of selective growth, Groupama has put international expansion at the heart of its strategy. This decision has been implemented by close study of acquisition opportunities in southern Europe, as well as in areas undergoing strong growth, including central Europe and Turkey. We have also reinforced synergies between our French and international activities, and among the subsidiaries themselves. 707 million Contribution to the Group s premium income, +4.6% Contribution to the Group s net income 34 million The successful integration of our new acquisitions in Spain, the United Kingdom and Turkey, and the support of newer subsidiaries in Hungary, Vietnam and China represent priorities for With growth of over 7% (excluding discontinued business lines), the consolidated premium income of the Group s subsidiaries in International and French overseas departments and territories (DOM-TOM) totalled 2 billion. The increase is primarily attributable to a significant growth in life and health insurance, as well as the strong contribution of the southern European subsidiaries. SPAIN In April, Groupama Plus Ultra became Groupama Seguros, supported by a major marketing campaign. The Group s new entity will implement a strategy of profitable growth in a particularly dynamic market. Priorities There are three key sectors in our growth strategy: finding a balance between life and non-life insurance activities, controlling distribution networks through more effective differentiation of intermediaries, and making use of automated management tools which facilitate the continuing reduction in management costs. At the same time, better technical and financial controls have contributed to the subsidiaries strong profits. Finally, the acquisition of two Azur-GMF subsidiaries, Azur Multiramos S.A. and Azur Vida S.A., finalised in 2006, was an additional step towards reaching our goal of achieving a leadership position in Spain. In a steadily growing market, Groupama Seguros experienced a 4.6% increase in premium income. The strong growth in life insurance continued with a 22.2% increase to 66 million, in keeping with our strategic objectives. Non-life premium income totalled 641 million and posted 3.1% growth. New products The subsidiary has continued to enlarge its product range, particularly in life insurance, with VidaMax, offering more methods for subscribing to Top Inversion Plus, Groupama Inversion Activa, etc. It has also broadened its agricultural product offerings. A range of financial and banking products was introduced in cooperation with Cetelem, the European leader in consumer credit, and UCI, a leader in marketing real estate products. Improved distribution The number of active intermediaries was up 15%, due the initiatives taken by Groupama Seguros. A new differentiation tool allows the assessment of each intermediary s portfolio status and sales objectives, which enables us to improve the network s follow-up and underwriting quality. A number of distribution contracts were signed, and cooperation projects were initiated with financial entities. Prevention Groupama Seguros introduced a prevention campaign as part of its fight against drink driving, and distributed over 100,000 alcohol testing kits to our insured drivers. Various outlets, including intermediaries, professionals and customers, etc. have conveyed prevention information in the areas of motor and home insurance. Groupama 2005 Annual Report I 71

78 Our activities International and Overseas Southern Europe Better productivity Targeting faster, more effectively shared and consistent information and procedures, the On-Line information technology project entered into the development phase. The first module will be produced at the beginning of million Contribution to the Group s premium income, +3.6% Contribution to the Group s net income 17 million ITALY In a sluggish economy where the non-life market is growing at less than the inflation rate, Gan Italia managed to grow more rapidly than the market overall, both in life and non-life products. The subsidiary brought in total premium income of 544 million, an increase of 3.6% compared to The subsidiary s contribution to the consolidated statements based on IFRS standards totalled 17 million and exceeded its objectives. While bringing its procedures in line with the new insurance code and new regulations for life products, the subsidiary continued with the implementation of a policy based on the pursuit of profitability and growth, giving particular emphasis to opening new agencies. Customer focus Using its Dimension Client programme, developed over a year ago, Gan Italia intends to gain a better understanding of its customers and target its marketing campaigns at the most profitable market segments. The criteria for this market segmentation reveal three types of customer: Top tier, customers with potential and other customers. At the conclusion of this survey, a new marketing initiative will be implemented to better respond to customer expectations. The network and sales inspectors will have decision-making powers on rates and policy terms. An attractive non-insurance product will be offered, based on specially adapted marketing tools, including the Prestige Card which is reserved for Top customers. Penetrating the agricultural market Gan Italia strengthened its presence in the agricultural market, relying on its agent network and creating partnerships like the marketing collaboration agreement signed with the National Union of Agricultural Machinery Sellers in December In May 2006, the 125th anniversary of our presence in Italy, the various entities of the subsidiary assumed the Groupama name. The brand name is now Groupama Assicurazioni. 72 I Groupama 2005 Annual Report

79 PORTUGAL Gan Portugal became Gan Seguros in November 2005 with the motto a vida por inteiro. After 85 years of operations in this country, it is one of the leading players in the group insurance market. With the help of its partnerships in banking/insurance, the subsidiary is now actively growing in the savings sector. For the third consecutive year, the subsidiary posted significant growth of 37.8% in premiums issued, 124 million, up 42% and 10.8% in life and non life respectively. The consolidated net income according to IFRS standards totalled 3.5 million, exceeding our goals. The strategy is working In 2005, the subsidiary strengthened its premium income and assets under management, taking advantage of dynamic savings growth through its traditional networks and also benefiting from banking/insurance agreements, particularly with Best and BBVA. Setting a goal of double digit growth, higher that that of traditional companies, it strove to seize market opportunities in life and health by taking advantage of the Group s and its own expertise. In addition, to distribute its general life and non-life products offerings, it staffed up and strengthened its agent and intermediary networks and enhanced its offerings with products specifically designed for the agricultural and professional sectors. A broader range of products A new savings product with periodic premiums, Viva Poupança, is now available in the life product range, together with a new version of the Opçao Certa package. In the non-life area, the subsidiary has worked on: developing the distribution of individual health products with two partner banks; starting up a workplace accident branch; and marketing a new motor formula offering the basic product combined with coverage of glass breakage. The new brand name was also supported by an overhaul of the Gamma Viva range of products and services. Productivity and responsiveness Groupama Seguros pursued its ongoing efforts to improve its productivity and responsiveness overall. It undertook the migration of its data on savings (first phase), group provident savings, home multi-risk and individual health to the new SIC data base, and prepared for the decentralisation of the underwriting of its products for individuals (motor vehicles, multirisk home and health insurance). A new data base for statistical indicators was also developed. Finally, in the internal audit area, the subsidiary initiated a project to formalise procedural guidelines and follow up on the ALM study with teams in France. 124 million Contribution to the Group s premium income, +37.8% Contribution to the Group s net income 3.5 million Groupama 2005 Annual Report I 73

80 Our activities International and Overseas Other European countries UNITED KINGDOM Operating in a highly competitive market, where there is strong growth in distribution via the internet, Groupama Insurances again closed out the year with strong growth in its net income and double digit growth in its premium income. This performance demonstrates the success of internal restructuring measures, following two profitable years. Growth was particularly strong in motor insurance (due to a drop in rates) and home coverage. On the other hand, growth slowed in non-life and business liability due to strong competition. This subsidiary contributed 49 million, up 50% from A strong year on the operating front While over half of premium income still derives from motor insurance, the diversification of the health and non-life insurance portfolios for small and medium size businesses and industries has become a priority. The acquisition of Clinicare was a positive step because it allowed us to triple the level of health care business and acquire a high quality infrastructure. Strategic products that meet our goals All the action plans for 2005 that were part of our strategic project Operational Excellence have been completed or are in the process of completion. These action plans have facilitated the simplification and optimisation of processes, and have resulted in significant gains in productivity, both in policy administration and claims management. In addition, Groupama Insurances undertook an in-depth study to gain better understanding of strategic challenges in distribution during This project resulted in Groupama Insurances developing e-commerce tools, I Market and Extranet, to market its products through brokers for small and medium risks, while developing a product for closely related markets. The significant events in 2005 were improvements in growth, profitability of net assets, and the combined ratio, which stood at 99.2%, compared to 101.0% in million Contribution to the Group s premium income, +11.5%* Contribution to the Group s net income 49 million The purchase was evidence of the group s commitment to this market, and gained us the 8 th place among British health insurers. Profiting from these initiatives, the subsidiary posted double digit growth for the first time. Already recognised as company of the year at the 2005 Insurance Day Awards organised by Insurance Day Magazine, it also received the 2005 Insurance Prize in the e-commerce category, which was awarded to Groupama. In another tribute, the chairman of our subsidiary was appointed chairman of Thatcham Motor Research Centre, which is recognised for its expertise in the prevention of car accidents. *Groupama Insurances acquired Clinicare in November Our accounts include this business for 1 month. 74 I Groupama 2005 Annual Report

81 Our activities International and Overseas Central Europe and Turkey TURKEY Groupama participates in the Turkish market through its 36% equity stake in the capital of the 7 th largest non-life insurer Günes Sigorta. Its position was strengthened at the beginning of 2006 with the acquisition of two other insurers, Basak Sigorta and Basak Emeklilik. In a market where the inflation rate dropped sharply in 2005 to about 8%, Günes Sigorta once again posted favourable results, with premium income up 19% and net income of 3.6 million. Its contribution to the Group s consolidated income according to IFRS standards was almost unchanged from the prior year at 1.1 million. Benefiting from very diversified distribution channels and a network of almost 1,000 exclusive agents, Günes Sigorta posted very steady growth in the individual accident, health and business risk sectors, which largely offset the slowdown in fire risk. Health insurance was boosted by the introduction of two new products in Groupama s foundations in Turkey were further strengthened when it acquired control of two local insurance companies within the framework of the privatisation programme. Basak Sigorta and Basak Emeklilik rank sixth in the Turkish market in both life and nonlife products, and insure 40% of the country s agricultural risks. HUNGARY After spending most of 2004 concentrating on restabilising the profitability of its subsidiary, Groupama Biztosito continued a policy of strengthening its motor portfolio and refocusing on other sectors, particularly multi-risk home, health and individual life. After a 2004 rate increase in motor third party liability policies that resulted in a significant drop in the portfolio, the subsidiary took a number of steps to stabilise the existing portfolio and focus on targeted growth in this area. Direct campaigns with car dealers provided support for subscriptions to the VIP policy. The subsidiary also diversified its distribution network, offering motor insurance policies through a supermarket chain. Groupama Biztosito s share capital was increased by 4 million in March 2005 to underpin its recovery processes. In addition, at the end of 2005, the subsidiary also initiated a review of its policy for reinsuring motor risk, with the goal of returning this branch to profitability. In multi-risk home insurance, product offerings were broadened with a new 24 hour assistance service offered to policy holders beginning in April This refocused policy resulted in a drop of almost 22% in premium income ( 43 million) in However, the loss was far less than that of 2004, and we anticipate breaking even in HUNGARY 43 million Contribution to the Group s premium income, 21.8% Contribution to the Group s net income: the loss was a quarter of last year s, 2 million TURKEY 266 million Premium income of Günes Sigorta, +19% Contribution to the Group s net income (36%) 1.1 million Groupama 2005 Annual Report I 75

82 Our activities International and Overseas Asia and Overseas CHINA Sichuan 2005 was the Group s first year in China after the official creation of Groupama S.A. Chengdu Branch in the Sichuan province. The first steps have been encouraging. In a country where foreign insurers still have a negligible presence with a mere 2% market share, our priority was to become known and recognised as a reliable and innovative insurance company. By the end of our first year of operations, the Groupama brand was already identifiable by Chengdu consumers. A formal request to convert the branch to a company operating under local law (to be known as Groupama Insurance China Ltd) has been submitted to the Chinese insurance control authorities (CIRC). Our branch has broadened its product offerings, which are deliberately very comprehensive to reach a large target group of customers farmers, city dwellers, artisans/merchants and small businesses. Three insurance products have been designed for this market, covering property damage, third-party liability and individual insurance (accident and daily hospitalisation compensation). We have requested authorisation to begin marketing two new products in the travel and loan insurance sectors. We are in the process of finalising plans to introduce hail and health insurance. In accordance with our expectations, ten agencies were opened, five in rural areas and five in cities. In addition, cooperation with the Agricultural Bank of China, one of the largest state banking establishments, has entered into its operational phase. We have also set up networks of doctors and veterinarians. There is no shortage of new opportunities in They range from opening new rural agencies to developing closer ties with partners and setting up a call centre to strengthen our management of customer relations. Hong-Kong Groupama is represented in Hong Kong by a branch of Gan Assurances IARD, which has a portfolio of property, motor, health and third party liability insurance with a target customer base of individuals and SMEs. Its premium income for 2005 was 13.7 million, up 20% in constant terms. VIETNAM Groupama Vietnam General underwent major changes in 2005 which were necessitated by its formerly narrow range of activities. New growth opportunities lie ahead. The Vietnamese government has authorised Groupama to extend its activities into all sectors of non-life insurance throughout the entire country. The group has thus received an extension of its licence, which was hitherto limited to agricultural risk, to cover all non-life risk (with the exception of third party motor liability and government owned companies). Underwriting authorisation is no longer confined to the Mekong region, and now extends throughout the entire country. Assessing the impact of this new scope of operations, the subsidiary has reinforced its management team and transferred its management centre to Ho Chi Minh City. It has implemented measures to revitalise its activities, and has begun to reconstitute its marketing network and reactivate its distribution agreements with the Agricultural Bank of Vietnam. Along the same lines, the range of products is being reviewed to respond to the needs of the urban and rural customers who will now be the company s target market. 76 I Groupama 2005 Annual Report

83 Groupama Vietnam General now has all the resources needed to reactivate its businesses and achieve its objectives in Its share capital was increased by 1 million in June OVERSEAS French overseas departments and territories (DOM-TOM) Gan Outre-Mer IARD is one of the major players in the West Indies, New Caledonia and French Polynesia. In 2005, the subsidiary concentrated on implementing new joint procedures for its entities (audit, information technology systems, and business agreements) as well as developing synergies among them. With its underwriting business almost exclusively in property and liability policies, the company s premium income totalled 71 million, up 18.3% over the prior year. This growth was in line with expectations for the Pacific zone, and was particularly significant in Guadeloupe, where we brought in major new business and repositioned our rate structure for non-motor policies. The contribution of Gan Outre- Mer IARD to the Group s consolidated net income was 8.4 million according to IFRS reporting standards. GAN OVERSEAS 71 million Contribution to the Group s premium income, +18.3% Contribution to the Group s net income 8.4 million Groupama 2005 Annual Report I 77

84 Our activities Financial services The contribution of our financial services subsidiaries to the Group in 2005 totalled 26 million, double the level achieved in Group banking and estate agency p.79 Asset management p.80 Private equity p.81 Real estate p I Groupama 2005 Annual Report

85 Our activities Financial services Group banking and estate agency Banque Finama Banque Finama acts as the bank for the Group and its companies and provides asset management services. It is primarily responsible for handling banking transactions for the Groupama and Gan networks, while also developing its own customer base. Paying close attention to its customers needs, the bank s core strategy is focused on high quality services and improved profitability. A strong focus on customer needs Banque Finama strives to provide high quality services to various group entities while responding ever more effectively to its customers needs. One example is its receipt of the ISO version certification for its management of noncash payment transactions, as well as improvements in the security of its operations (such as the Digipass on Finam@direct). The broadening of our product offerings continued with new functionalities on the bank s online website, payment of interest for current accounts, increased automation of transactions, and the delivery of computer generated customer information summaries to group entities to allow them to monitor their customers and their portfolios more effectively. Attentive to the networks, Banque Finama supports their progress by refinancing the current accounts of their associates, thus contributing to the strengthening of banking services for businesses. Corporate Finance, a dedicated service, now handles the challenges of mergers and asset sales by businesses or companies. Finally, the Club de Patrimoine, introduced in September in collaboration with the Regional Mutuals, will strengthen ties with top tier customers. It will be extended to the entire insurance network during Growth in activities In its activities as the group s bank, the bank experienced another year of growth in all its business areas, with a notable improvement in services performed for Group entities. Net banking income, before repayment of management expenses to Groupama Asset Management, increased 15.1% compared to The estate agency area posted strong progress in the areas of lending (both directly and through the Regional Mutuals), and of funds under management and winning new portfolio business. Providing obvious synergies with estate agency activities, the new offering of balance sheet advisory services for businesses produced encouraging preliminary results. At the same time, a number of initiatives to improve the organisation and security of banking activities have been implemented. Some of these will continue into 2006, such as the application of the new Basel II solvency ratio and conformity with IFRS standards. For the first time, Banque Finama prepared its consolidated statements in compliance with the new international standards in With 13.7% growth in its net banking income, Banque Finama made strong improvements in its profitability, generating > Strategy in action Protecting business performance. Banque Finama has developed a model for detecting potential operational risks, covering all aspects of its business. This model produced a problem data base with allows us to assess hypothetical operating risks, gather information on actual risks, and follow up with corrective measures, keeping track of results in progress tracking sheets. We have established a system for alerting managers to positive or negative financial impacts of greater than 1,500 euros, in addition providing a quarterly performance indicator on the status of operating risks. Groupama 2005 Annual Report I 79

86 Our activities Financial services Group banking and estate agency net income of 12.3 million, up 93% from The net banking income for the year was 48 million, benefiting from the higher commissions received on securities business (the value of securities in custody rose 20.8% to 87.8 billion) and estate agency activities (funds under management on asset management terms were million, up 61.7%; loans outstanding were million, up 39.9%.) According to our customer survey, which is performed each year with both our institutional and individual customers, 100% of the bank s institutional customers, and 98.7% of the bank s estate agency group customers expressed satisfaction. 48 million net banking income from Banque Finama, +13.7% in I Groupama 2005 Annual Report

87 Our activities Financial services Asset Management Groupama Asset Management Groupama Asset Management is the group subsidiary dedicated to securities management. The 7 th largest asset management company in France*, it specialises in asset management in Europe. In Asia and the United States, it acts in partnership with market leaders, while retaining management responsibility billion assets under management, +16.7% The resources for a growth policy The specialised expertise of Groupama Asset Management allows it to deliver high quality, consistent and secure performance to its customer base of investors, businesses and distributors. Among the objectives of this subsidiary is to build an external customer base, primarily among institutional investors (especially pension funds) and businesses. Innovation through the marketing of products targeted at different market segments is another policy focus. The Groupama Active Equity fund received the 2005 Prize for Creativity awarded by Le Figaro and Journal des Finances for the innovative quality of its management. Building on its reputation in the asset management world, Groupama Asset Management also contributed actively to exchanges of ideas by organising debates on economic topics, such as the colloquium on the future of stock exchanges organised jointly with the CEPII, a French international economic research body. Finally, taking a stand on supporting socially responsible investment, the subsidiary provides a perspective for its customers on its role as an active, responsible manager, focussed on the long term. Funds are up sharply With net deposits of 2.5 billion in 2005, up 90%, Groupama Asset Management experienced remarkable growth in its managed funds of 68.6 billion, of which 22.8 billion was in mutual funds. All segments of our clientele contributed, especially institutional investors and business customers. Recognised as a market leader, Groupama Asset Management was brought in to advise on a growing number of calls for tender in France and abroad. Out of 45 major consulting jobs in 2005, Groupama Asset Management won eleven, including the ARCCO tender offer; we also introduced active management of share funds in the Pension Reserve Fund. Recognition of our performance Groupama Asset Management won a wide range of awards in Once again, many of these honoured our whole range of products. We won the Company Savings Prize from Mieux Vivre Votre Argent, four trophies from Revenu, (three gold medals in the last three years). There were also awards for products: first prize for asset management from L Agefi in the Euro Bond category, certificate for the best short term euro bond fund for 1, 3 and 5 years from Victoires des Sicav 2005 (La Tribune and Standard & Poor s). Finally, Groupama Asset Management advanced in Standard & Poor s list, which is the uncontested standard for ranking asset managers. 65 of its funds received stars and 32 received three or more stars; 10 funds were awarded 5 stars. Total assets under management by asset category: 65% bonds, 20% equities, up 45% in 2005, 15% in diversified, alternative and cash management, which were up 74%, 20% and 11% respectively in * source: Watson Wyatt World 500, 12/31/2004. Groupama 2005 Annual Report I 81

88 Our activities Financial services Private equity Finama Private Equity Finama Private Equity, which is dedicated to managing unlisted assets for third parties, gives Groupama the resources it needs to support the growing interest among French institutional investors, especially insurance companies, in private equity investments. As a leader in this business, Finama is among just three asset management companies specialised in this area and backed by a large French insurer. 677 million funds under management Against a backdrop of strong growth 2005 was a record year for raising funds in both Europe and the United States, with particularly strong activity in business transfers and leveraged buyouts. Against this favourable backdrop, the market continued to restructure itself. Capital allocated by institutional investors to private equity increased, but focussed on a smaller number of investment teams Insurers in France reaffirmed their interest in this type of investment, either directly or through funds of funds, a market which saw significant development over the year. As a portfolio management company certified by the AMF, Finama Private Equity is present in two distinct private equity businesses, through its fund of funds activities performed by the QUARTILIUM team and through its direct investment activities, which are performed by the ACTO team. QUARTILIUM The fund of funds activities carried out on the international level represented approximately 600 million in the volume of commitments under management or advised at year-end Its goal is to give access in a diversified fashion to the entire group of assets which constitute private equity. QUARTILIUM provides investors with access to the very best European and American management teams, through a diversified range of products adapted to their needs. QUARTILIUM experienced a year of record growth in 2005, investing over 150 million through its two new funds, each composed of management funds handling one or more investment programmes. During 2005, QUARTILIUM s range of products strengthened its strong market position. It raised almost 160 million for its generalist fund of funds QUARTILIUM II and the themed funds of funds dedicated to the mezzanine sector, QUARTILIUM Mezzanine. ACTO Direct investments, which are carried out only in France, represented a portfolio of almost 100 million at year-end The Group invests as a minority or majority shareholder in the equity of medium size French businesses, particularly in those which hold a leadership position in high profile, fast-growing sectors. ACTO also holds significant or controlling positions in CIAT, the foremost French operator of campsites, ODALYS, the second largest French tourism residence operator, and Pomme de Pain, the third largest French sandwich making chain. ACTO more recently took a controlling interest in 82 I Groupama 2005 Annual Report

89 Locabri, one the French leaders in the hirepurchase of modular buildings and collapsible warehouse structures as well as in VVF*, the second largest operator of club villages in France. We have also decided to recruit a new team dedicated to the management of a new fund that targets the mezzanine segment. This fund will become operational in The management company s business generated an almost 20% increase in income, which totalled 5.5 million, and net income was up over 40% at 0.6 million. * The agreement between Caisses des dépôts, VVF Association and Finama Private Equity on opening the share capital of VVF s competitive sector occurred in 7 April Internal organisation To support this growth, Finama Private Equity has strengthened its management teams as well as its back office and formed a marketing team dedicated to raising investment funds. Groupama 2005 Annual Report I 83

90 Our activities Financial services Real Estate Groupama Immobilier With expertise in various areas of real estate, including forest properties, Groupama Immobilier manages the Group s real estate portfolio and maximises return on these holdings. It is among the foremost players in this market. 3.4 billion in the real estate portfolio (697,000 m 2 ) Of which office space was 70%, residential 28%, and forests 2% 200 million in rents received Steady marketing activities The housing market is the topic of a national debate focusing on à la découpe sales (which feature certain tax advantages to investors), and legal constraints are expected to tighten for investors in this area. In the last three years. Groupama has generated over 600 million in home sales, realising almost 300 million in capital gains. In the rental market, 346 leases were signed in 2005 versus 338 in 2004, showing growth of less than 5%. Monthly rental levels for sublets stands at about 18.75/m 2, up 4% compared to The average rent of existing tenants in an inventory of almost 2,500 leases is 16.76/m 2 versus 15.76/m 2 in There was still a buyers market in office space during 2005, particularly in Ile-de- France, which also affected vacancy rates and pricing. With this backdrop, 35,015 m 2 were re-let in 2005 with an average annual rent of 389/m 2 versus 419/m 2 in However the stock of occupied commercial space is rented at 385/m 2, a level even lower than the average. Our priority has been to retain various tenants of large scale properties. Despite the difficult market, 14,500 m 2 were renegotiated with these tenants at rents 5.3% higher than in In summary, the value of Groupama s real estate assets posted average growth of 7.5% (5.8% for office space and 11% for residential) in The rise is attributable to the abundance of international investment which put upward pressure on values under the effect of rate pressures. Creating value and receiving certifications Groupama Immobilier continued its renovation and refurbishment programmes to bring various buildings up to market standards and/or new environmental technical standards (asbestos removal, upgrading elevators, and lead precautions). The 2000 version ISO 9001 compliance certificate obtained in October 2004 was confirmed by a review that showed that the improvements targeted in 2004 had been achieved. The Audit and Risk Control Department became operational and began to structure a strategy to counter money laundering and to audit the always sensitive issues of observance of purchasing procedures and competitive bidding practices in the building industry. A policy of partnership The partnership with Optimege, a subsidiary of Dalkia and Veolia, continued, although it did not entirely achieve the goals set by these two entities. Groupama Immobilier therefore entered into asset management partnerships in other areas, particularly with the real estate group STAM. The investment in dedicated funds managed by STAM resulted in our assuming asset administration responsibilities for several buildings in its portfolio. This progress is consistent with our strategy over the last two years of gaining real estate management contracts from clients outside the Group. 84 I Groupama 2005 Annual Report

91 MY INSURER HAS TO BE A REAL PARTNER WHO STUDIES WITH ME WHAT HAS TO BE DONE TO PROTECT MY COMPANY AND ITS EMPLOYEES.

92 Social Responsibility The March against Rare Diseases supported by Groupama Health Foundation.

93 Preventing risks to protect the Group s performance p.88 Preventing safety risks to individuals and property p.91 Foundations and patronage p.95 Sponsorship p.98 By anticipating the changing requirements of its policy holders, taking measures to reduce risk, and becoming involved in social issues through its charitable foundations, Groupama remains true to its principles: local presence, responsibility and solidarity. Groupama 2005 Annual Report I 87

94 Social Responsibility Preventing risks to protect the Group s performance Risk management is a major concern for the Group, and remains among our highest priorities. Control of risk is essential to our performance over the long term and to our very survival, as well as being to the benefit of our policy holders, who place their confidence in us for their financial security and the performance of their investments. Organisation of risk control within the Group Risk management is coordinated on three levels, corresponding to the Group s organisation. The Regional Mutuals The Regional Mutuals are autonomous legal entities which establish their own internal control systems and handle their own risk management. Since 2004, the Chairman of the Board of Directors of each Regional Mutual has prepared a report on the internal control system, which is submitted to the statutory auditors for review. Reinsurance of the Regional Mutuals is provided by Groupama S.A. in accordance with the provisions of the Reinsurance Agreement. For risks related to the distribution of banking products and life insurance, the Regional Mutuals apply the risk management systems established by Groupama Banque and Groupama Vie. Groupama S.A. and its subsidiaries The principal risks of Groupama S.A. and its subsidiaries are managed within established parameters by the various management teams of Groupama S.A. Risks related to insurance activities are handled by the specialised divisions in the relevant area. Reinsurance risks are managed by the managers of the Reinsurance and Steering Division. Asset and asset/liability management risks are managed by the Investment Division. Operational risks relating to information technology and logistics are managed by the representatives for these areas (Groupama SI and Groupama Logistique respectively). Legal risks are managed by Groupama S.A. s corporate office (these risks include money laundering and issues related to the Information and Freedom Law). Groupama S.A. s Board of Directors has established an Audit and Accounts Committee whose main missions include examination of the coherence of the internal audit system, risk management, observance of ethical guidelines, review of internal audit procedures, and preparation of the annual report on internal audits. Group The General Auditing and Actuarial Division performs a comprehensive economic and financial audit of the Group s principal entities on a three-yearly basis, in addition to the operational audits performed within these entities. The mission plan of the General Auditing and Actuarial Division is approved by Groupama S.A. s CEO and is presented annually to the Audit and Accounts Committee of Groupama S.A. The Group s Internal Control and Risk Management team, established in 2004, has the responsibility of coordinating and staffing the risk management function within the Group. Its mission is to direct the internal control systems within the Group s businesses, and to implement cross-division action plans in the area of risk management. In 2004, it completed a comprehensive list of risks that are shared among the insurance businesses. Each Regional Mutual and every subsidiary of Groupama S.A. has had an internal Control function since The Group s Management Control Department is responsible for ongoing supervision of the results and achievement of the Group s objectives. Each Regional Mutual and every subsidiary of Groupama S.A. also has a management control function. 88 I Groupama 2005 Annual Report

95 Insurance risks Groupama S.A. s divisions ensure that the Group s product range is adapted to its strategies. Life and non-life insurance products are created by the Groupama S.A. s specialist divisions on behalf of the Group s businesses. Product development is carried out based on market studies and profitability analyses using actuarial tools to assure satisfactory profitability. The Regional Mutuals and Groupama S.A. s subsidiaries are then responsible for the marketing and management of these products. Delegations of underwriting and claims authority are clearly defined in each of the Group s entities. Risks are accepted or rejected at each level of authority and decisions are based on underwriting guidelines, which combine the Group s operating and marketing rules. The specialist divisions of the Groupama S.A. handle directly the most significant and complex underwriting and claims risks. The reinsurance process is organised on two levels. Groupama S.A. handles internal reinsurance for all the Group s entities, with the goal of optimising the risk retention of each entity. External reinsurance defines the best reinsurance structure for the Group, and the level of risk coverage is based on computerised models. Selection rules are drawn up by the Security and Reinsurance Committee, which is composed of the management of the external cession reinsurance division of Groupama S.A. and several of its subsidiaries. These rules are based on rating agency rankings, with the goal of monitoring the solvency risk of the reinsurers. Cumulative risks arising from natural disasters are monitored by Groupama S.A. at the time they are underwritten. (There is a limit on total amount of policies written for any one site). Groupama S.A. then decides how much of these commitments should be ceded to reinsurers (based on calculations that simulate portfolio exposure). Financial risks Asset risks The Investment Management Division, which is part of the Group s General Finance Division, guides the management of asset risks for Groupama s French subsidiaries. It also takes part in the financial steering committees of the international subsidiaries. For investment related risks, setting exposure limits and monitoring compliance with these limits are part of the audit procedures for asset managers. For equities, there are limits on the minimum permissible liquidity, expressed in the number of days necessary to liquidate a position, the maximum allowable percentage of capital and floating capital that can be held, as well as diversification ratios. For bonds, weightings are based on credit ratings, with diversification limits and controls over their total amount in the portfolio. The Group s manager, Groupama Asset Management, has its own risk management department, and its managers have their own procedures for monitoring and controlling risk. Risk management in the real estate sector has been strengthened with an Audit and Risk Management department within Groupama Immobilier. Asset/liability risk management Since the mid-1990s, the Group has had an Asset/Liability management division within the Group s General Financial division, which monitors the condition of the balance sheet, selects risk analysis tools Groupama 2005 Annual Report I 89

96 Social Responsibility Preventing risks to protect the Group s performance and establishes asset/liability strategies. These topics are addressed in quarterly Asset/Liability Committee meetings for each of the insurance companies. There is also a project underway to provide the Group with a single shared tool for the simulation of future developments, for the purposes of strategic planning, calculations of asset values and asset/liability management. Regulatory compliance The Group s General Financial division oversees the company s regulatory compliance, particularly with regard to rules pertaining to the solvency margin and those concerning the commitments of each of Groupama S.A. s entities, as well as the Group s consolidated solvency margin coverage. It proposes and implements the most appropriate financial solutions, with the goal of optimising allocation of capital and reserves within the Group. Legal risks Fighting money laundering The Group s entities observe legal obligations and professional recommendations in their practices and procedures to fight money laundering. Our internal audit system is based on knowing our clients, and also on a range of checks carried out prior to executing a transaction, later followed up with analyses of computer data on completed transactions. data processing and documents distributed to clients. He/she also provides guidance on statements made to the National Information and Freedom Commission. As with money laundering prevention, Groupama S.A. s corporate office provides ongoing assistance to the entire Group. Operating risks An insurance programme has been established to provide property and liability protection to the Regional Mutuals and to Groupama S.A. and its subsidiaries. These policies are shared between internal and external insurers (for the most significant risks). The principal coverages are as follows: employee insurance, top executive civil liability insurance, professional civil liability insurance, business civil liability insurance, property insurance (real estate, offices, equipment, car fleets, etc.). A programme to review the plans for maintaining business operations was initiated during 2005 for all the group s businesses. Each of Groupama s entities has a designated TRACFIN representative. Groupama S.A. s corporate office offers ongoing methodological and legal assistance to the entire Group. The Information and Freedom Law Each of Groupama s entities has designated a staff member to oversee the application of this law. This individual monitors the compliance of personal data, computer 90 I Groupama 2005 Annual Report

97 Social Responsibility Preventing safety risks to individuals and property For the last fifty years, Groupama has maintained its proactive policy in the area of risk prevention, focussing on the protection of individuals and property to anticipate risks and accidents. Because of its agricultural background, Groupama initially dealt with rural prevention to reduce the number of fires and personal injuries to people in agricultural businesses. This original prevention campaign has been enhanced, and today it extends to all risks and all types of members and customers. This chapter gives information on a few of the Group s significant initiatives. Groupama is innovative in the advice, techniques, and information packages that it provides to its policy holders. It engages in individual and group initiatives at all levels of the organisation with the support of representatives of the Local Mutuals, as well as the help of engineering teams based in regional headquarters and at national level. Prevention teams are present in all the Regional Mutuals and the principal subsidiaries. Risk prevention in agriculture Groupama is continuing and strengthening its activities in risk prevention in agriculture, employing modern approaches while maintaining its grounding in the Group s original principles. Environmental, health and safety risks are mounting. They pose a potential threat to the survival of agricultural businesses. Only conscientious compliance with preventive measures and prudent risk management can limit their occurrence and the potential consequences. In keeping with this principle of providing support for farmers risk assessment and decision making, we have developed a guide and brochure on electricity entitled Better Understanding of Electricity. Its purpose is to give farmers a better understanding of important guidelines on the safe use of electricity and to provide answers to frequently asked questions. The publication also provides them with information on how to protect workers and livestock on their properties. At the beginning of 2005, Groupama signed a partnership agreement with Promotelec, to make a joint contribution to permanent improvement in the safety and quality of electric installations, particularly in the context of agricultural activities. We inaugurated a number of fire safety programmes in 2005 whose objective is to avoid the total destruction of buildings. In specialised agricultural structures (including poultry and pig shelters, drying units, and produce-storage facilities for crops such as potatoes and forage), a fire can have catastrophic consequences. It takes no longer than a few minutes for a building to burn to the ground, with devastating psychological impact on the farmer and his family and co-workers. Raising the awareness of construction sector professionals is a major goal. Construction initiatives to limit the effects of fire in the original construction or subsequent renovation of farm buildings have been presented at information meetings. Groupama has integrated the Euroclasses Feu guidelines into its prevention and insurance policies for agricultural structures to comply with developments in common European standards for the fire resistance of construction materials. We developed a guide on Confronting threats to agriculture for members, giving farmers practical solutions and suggestions to help them to deal with the increasingly frequent problems they face, including theft of agricultural stocks and equipment and vandalism. Two years ago, we published a very comprehensive Prevention Guide to improve the safety of farm workers. Protecting the environment Protection of people and the environment and the struggle against pollution are important concerns for professionals in the agricultural and food producing industries. Groupama offers innovative environmental impact coverage and advises farmers and businesses on the best use of equipment and materials to address specific risks, which include handling and storage of environmentally friendly products and onsite procedures for refilling crop sprayers. Groupama 2005 Annual Report I 91

98 Social Responsibility Preventing safety risks to individuals and property Road safety Groupama has taken important initiatives in road safety over many years. In 2005, it continued its efforts to improve road safety by taking steps to provide lifelong support to drivers. The network of Centaure centres, created in partnership with Groupama, Caisse des Dépôts et Consignations and the French motorway companies, has nine road safety training centres throughout France (two others will be opened in 2006). More than 450,000 individuals have received training since Centaure was established in Centaure uses an unusual approach in its training, increasing driver awareness with simulations of common risky situations on monitors in specially equipped vehicles. A road safety package for schools Groupama and Prévention Routière have developed a package including 2 CDRoms, a teacher folder, student booklets, and a poster displaying essential safety data for pedestrians and scooter and motorcycle riders. 10 de Conduite Jeune This programme, organised by the Gendarmerie Nationale, Renault, Total, Centaure and Groupama, targets young people between 16 and 18; four driver education courses are presented to students in their schools. Young people are made aware of the motoring challenges so that they can see, understand and anticipate driving hazards, while also learning basic traffic rules. The programme allows 8,000-10,000 young people every year to experience driving in a car equipped with dual controls. 10 de Conduite Rurale This is a programme supported by the National Police, Claas, Total and Groupama, which travels to agricultural schools to introduce young people to techniques for driving agricultural vehicles in a safe fashion. For the last 30 years, a French School Trophy has been awarded to winners in a national contest. Post driving-licence training sessions are designed for young people with less than three years driving experience. Demonstrations using a voiture-tonneau (specially mounted test vehicle) are presented at gatherings and regional exhibitions to make attendees aware of the necessity of safety belt use. We also offer training in how to draft an accident report prepared on an amicable basis, as well as drawing attention to major risk factors (alcohol consumption, drowsiness, etc.) and information on the MOT test. Drive safely at every age. Implemented in 1998 by Groupama in partnership with the National Federation of Rural Senior Citizens Clubs, this programme aims to increase awareness of accident prevention and train older people to enable them to continue driving as long as possible under the safest conditions. CESVI-France, a research and training centre for car repair, was established by Groupama and two other insurers to contribute to road safety and energy economy. It teaches various processes for optimising the quality of car repairs, thus improving vehicle dependability (bumper installation, for example). Preventive medicine Groupama is ahead of the game in preparing for the implementation of a decree that will make insurers responsible for a certain number of preventive procedures in the context of responsible policies. To existing measures including flu vaccines, screening for colon-rectal cancer and parodontologie (preventive dental procedures to combat tooth loss) other procedures have been added: for women: coverage of bone density scans (not reimbursed by Social Security), a test that measures bone mass density to determine if measures should be taken to prevent the onset of osteoporosis; for children: coverage of vaccines which are now prescribed by paediatricians but not reimbursed by Social Security; for everyone: reimbursement for a complete preventive oral/dental exam for the purpose of preventing tooth decay and the resulting need for prosthetic work, which is always costly; for all those travelling to distant countries: coverage of vaccines or medications to prevent infections such as malaria and yellow fever. Groupama provides financing for the Health Prevention Insurers Association and is an active participant in its activities. In 2005, this organisation financed a Together we can prevent childhood obesity campaign in 10 French cities. For many years, the Group has also supported programmes on care, prevention and medical research (see the following chapter on the activities of the Groupama Health Foundation and the Les Massues medical-surgical and rehabilitation centre). 92 I Groupama 2005 Annual Report

99 WHAT DO I EXPECT FROM MY INSURER? THAT HE GIVES ME GOOD ADVICE TO PREVENT THE ACCIDENTS THAT COULD AFFECT MY FAMILY.

100 Social Responsibility Preventing safety risks to individuals and property Food safety Confronting the risks of bacterial contamination, which are a threat to consumer safety, Groupama and its partners support the professionals in the agriculture and food industries as well as green tourism, to enhance the safety of the production chain. We use an approach that makes prevention a priority, with a preliminary audit of health risks, recommendations for improvements, and access for industrial clients to an internet site specialised in health supervision, Amalys-news.com, as well as an innovative contamination insurance product. Industrial and institutional risk Aware that a truly responsible insurer cannot limit its role to just handling potential claims, the Group is developing relationships with businesses and groups which seek to safeguard their futures with the most complete risk analyses and controls as early as possible. Groupama plays the role of partner-advisor. Groupama s preventive engineering team and Gan Eurocourtage s preventive engineering office (BPI) carry out audits to detect potential risks, and assess types of coverage and their cost to policy holders. For the last two years, Groupama has been reviewing its portfolio while analysing risks. With the completion of the review of the Regional Mutuals portfolios, a number of prevention plans have been implemented (almost 900 in all), following risk assessments by adjustors and exchanges of views among group employees and executives of insured businesses. Gan Eurocourtage s BPI increased its staff in February 2005 and now has 20 permanent employees who share the benefits of their expertise through brochures, broker publications, and extranet brokers. The engineers and technicians participate in drawing up policies, and may be involved in existing policies at the request of cus- tomers or brokers. The prevention engineers also participate in road related risk (car fleets, for example). For local authorities, this partner-consultant aspect takes the form of many initiatives in information and training. The Info- Mayor Guide, originally published in 2002 and regularly updated, helps elected representatives to confront the increasing risks and growing complexity of municipal government, keeping them informed of regulatory changes affecting their responsibilities. Information sheets provide practical summary information on sensitive areas, (such as playgrounds and municipal traffic patterns) and offer useful advice on appropriate preventive measures. Another specific example: Groupama Grand Est has initiated a partnership with APAVE, the leading private group, advising on safety and quality to businesses and local authorities. This partnership, which was tested in part of our territory during 2005, will be extended. Prevention of accidents in homes We undertook numerous campaigns to heighten the public s awareness of risks at home: checking electrical installations, demonstration of fire extinguisher use, publication of practical guides, private swimming pool safety measures, etc. Fire prevention remains a priority in home risk, and we therefore produced brochures on risks related to electrical wiring as well as brochures recommending installation of smoke alarms. These activities were aimed at informing and warning our members and policy holders, in anticipation of regulatory changes. A product which links smoke detectors to a central surveillance centre is offered to policy holders by a Group subsidiary to protect their residences even when unoccupied. 94 I Groupama 2005 Annual Report

101 Social Responsibility Foundations and patronage Continuing commitment over the long term is a measure of success. In this spirit, the Group has acted as patron to various scientific and cultural endeavours through charitable foundations, and it is involved with sports through its sponsorship of sailing. The struggle against rare diseases and a contribution to protecting our film heritage The Groupama Health Foundation was established in 2000 on the occasion of the Mutual s centennial celebration. Its principal mission is to lend its support to the fight against rare diseases. The Gan Foundation for Film was established in 1987 during the Cannes Festival. It is devoted to safeguarding and promoting our cinematographic heritage and supporting new directors. The Groupama Health Foundation The primary focus of Groupama s Health Foundation is the struggle against rare diseases. It also supports the activities of the European Institute of Genetic Mutation and the Les Massues medical-surgical rehabilitation centre (see below). Its Board of Directors, chaired by the Chairman of Groupama, consists of the Chairmen of the Regional Mutuals and well-known figures in the fields of medicine, medical research, the sciences and health economics. The Foundation s mission is to: develop information on rare diseases, respond to the specific needs of victims of these conditions and offer support to patient associations, promote research and innovations, particularly in new treatments. These aims have guided the Foundation since its creation in 2000, in keeping with national concerns in this area. Three of the ten priorities laid out in the National Plan on Rare Diseases presented on 24 November 2005 by the Ministers of Health and Research and the Secretary of State for the handicapped precisely mirrored the activities of the Foundation. Since its inception, the Foundation has dedicated more than 2.7 million to financing over 100 projects and has formed close partnerships with INSERM (the French government statistical agency) and its ORPHANET service, and with Envol, an association that welcomes children afflicted by serious illness to a recreational centre where medical support is provided. The Regional Mutuals have contributed their support to 46 of these projects. Among our activities in 2005, there were several major initiatives that corresponded to the Foundation s three missions. Facilitating distribution of information In October 2005, the Groupama Health Foundation organised its first colloquium for physicians and patient associations on the topic of rare genetic eye diseases. With Professor Jean-Louis Dufier, head of the department of adult and child ophthalmology in the Necker-Enfants Malades Hospital in Paris presiding, this conference allowed over 200 participants (who included paediatricians, ophthalmologists, orthoptists and association members) to hear about the most recent advances in this area. It was an invaluable opportunity for an exchange of views among the participants. Based on this success, this initiative will be repeated every other year. The Foundation continued to develop its Internet information and service site. This site, which was inaugurated in 2001, is dedicated exclusively Groupama 2005 Annual Report I 95

102 Social Responsibility Foundations and patronage to rare diseases. With over 5,000 visits monthly (compared with 3200 in 2004) and almost 20,000 pages visited, it is consulted with increasing frequency, underlining its key role in the distribution of information on rare diseases. In 2006, the site will be made accessible to those who are blind or have limited vision. Groupama continued its efforts to make its members and employees aware of these issues. An example is Groupama Val de Loire s patronage of three associations supported by the Foundation. More than 150 Group employees also participated in the March against Rare Diseases, organised annually during the Telethon campaign. Ending the isolation of disease victims and their families Every year, the Groupama Health Foundation and the Regional Mutuals support programmes presented by patient associations. In accordance with the policy established by its Board of Directors, the Foundation gives preference to long-term partnerships in order to participate in programmes over a long period. For the third consecutive year, the Foundation gave 20 children the opportunity to experience a holiday at Envol, the European recreational centre with associated medical facilities, which is unique in France. The Foundation covered expenses for the portion of these breaks not covered by the compulsory health insurance scheme. A number of Regional Mutuals assisted this activity by providing sponsorship. For the fourth year, Groupama Loire Bretagne and the Foundation continued their support of the activities of Rire Medicin, an association of professional clowns, for children who are cancer patients in the hospital centre in Nantes. The Foundation continued to support the Vivement l École association for the education of autistic children by financing special education experts to assist them in class. This programme promotes the educational main-streaming of autistic children, based on work by Professor Jean- Louis Adrien at the Psychological Institute at the l Université René Descartes (Paris V) on the importance of such assistance to the psychological and brain development of autistic children. The Foundation also assists children who are victims of spinal muscular atrophy, by paying for a teacher to visit the home of the sick child for an entire year. This programme is managed in partnership with Votre École Chez Vous. To make new communications technologies simpler for the affected patients, the Foundation has financed equipment facilitating the independence of patients suffering from lateral muscular sclerosis. Financing research on rare diseases In 2005, the Groupama Health Foundation awarded two scholarships known as reentry assistance to young researchers who wish to pursue their research work in France following post-doctoral training overseas. 14 scholarships have been awarded to young researchers since 2001, in partnership with the Medical Research Foundation. To further support young researchers, the Foundation created a prize called Hopes of the Groupama Health Foundation. Each year, the Board of Directors grants the winner a 15,000 scholarship for a 3 year period, 45,000 in total. The call for candidates was launched at the end of 2005 and the winner will be announced in May The Les Massues Medical-Surgical Centre Prevention and treatment are at the core of the mission of the Centre des Massues as they are for Groupama, the number one in personal health insurance. The Les Massues Medical-Surgical Centre has a widely-recognised level of expertise. It has been accredited by the Agence nationale d accréditation et d évaluation 96 I Groupama 2005 Annual Report

103 en santé (ANAES National Agency for Health Accreditation and Evaluation). It specialises in spinal surgery, fitting of prostheses and rehabilitation of amputees, treating of back pain and rehabilitation of children. It has 239 beds and 300 staff. Work on expanding and renovating the Centre has begun and will continue until The Groupama Health Foundation has given its support to the organisation of a conference for a national audience on mechanical pains and spinal deformities, which was held on 8 April 2006 in Lyon. The Gan Film Foundation Supporting the films of today, yesterday and tomorrow The Gan Film Foundation, established by Groupama S.A., is one of the foremost private partners in French filmmaking. It is active in the creation, distribution, marketing and restoration of films. The Gan Foundation also wishes to play a key role with cinema audiences and supports films during their initial screening periods. For the fifth consecutive year, it continued its Sunday at the Cinema programme, allowing young people in the provinces to attend a film for just 2. 80,000 viewers and 620 art theatres have benefited from this programme. Finally the Gan Foundation takes an interest in the world s film heritage in providing its support for the preservation and distribution of many masterpieces. After helping to restore François Truffaut s Les 400 coups in 2004 and Jacques Tati s Mon oncle in 2005, it is supporting the 2006 restoration of Léon Poirier s 1928 film, Verdun, visions d histoire. Since 1987, it has allowed five or six young filmmakers a year to direct their first full length film by providing production financing of 67,600 per project. Over 19 years, more than 120 films have received this assistance and more than 25 million spectators have applauded our selections. Figuring among the ranks of our prize-winners are Delicatessen by Jean-Pierre Jeunet and Marc Caro, L Odeur de la papaye verte by Tran Ahn Hung, La Vie rêvée des anges by Erick Zonca, Brodeuses by Eléonore Faucher, and La Moustache by Emmanuel Carrère. The Gan Foundation supports over twenty film festivals in France and abroad, providing financial assistance, organising special screenings, and awarding prizes. This year it will again award a prize entitled Un Certain Regard Fondation Gan pour le Cinéma during the Cannes Festival; it carries a 30,000 award for the French distributor of the prize film. Groupama 2005 Annual Report I 97

104 Sponsorship Sports sponsorships are powerful mechanisms for boosting our Group s image. They are also an inspiring motivator, encouraging a sense of unity. Sponsorship of sailing is in keeping with the spirit of responsibility, solidarity and efficiency that inspires Groupama. Adventure and technology Groupama and its skipper Franck Cammas face the fresh challenge of competing for the Trophée Jules Verne, commemorating the legendary record in circumnavigating the globe in less than 50 days. Beyond the human and sporting side of this adventure, this project is also a technological challenge which Franck Cammas and his team have been working on over the last 18 months. The maxi-trimaran Groupama 3 will be launched in July. It is an unprecedented entry in the large boat category. 31 metres long, 24 metres wide, with a mast topping out at over 40 metres and maximum sail surface of 830 m 2, this craft is eloquent evidence of the ambitious nature of this project and of the Group itself, which has strongly and successfully supported Franck Cammas since This new programme is led in partnership with the Orma circuit for 60 foot multihulls. This season we are looking forward to a highly prestigious event: the Route du Rhum (Rum Route Race), from Saint-Malo to Pointe-à-Pitre. 98 I Groupama 2005 Annual Report