2007 - April

2.0
Notes to the consolidated financial statements at December 31 st 2007
Furthermore, APRIL GROUP is a founding member of the
micro-insurance association “Entrepreneur dans la Cité”,
paying in 500 thousand euros in this respect over 2007.
Note 9. Financial and insurance risk management
9.1. Classification of risks under IFRS 7 and IFRS 4
9.1.1. Financial risks
IFRS 7 recognizes the following categories of financial risks:
Market risk: this risk can be broken down into the foreign
exchange risk, fair value risk on fixed-rate financial
instruments, and value risk on listed instruments;
Credit risk: this corresponds to the risk of default by
an issuer or counterparty, i.e. the risk for a creditor of
definitively losing their debt insofar as the debtor will be
unable, even by liquidating all of its assets, to pay back all
of its commitments;
Liquidity risk: this concerns the risk of not being able to
sell a financial instrument at a value close to its fair value.
It may result in it effectively being impossible to sell the
instrument (absence of market, buying counterparty), or in
an illiquidity discount;
Cash-flow risk linked to interest rates: for variable-rate
financial instruments, changes in rates imply changes in the
company’s future cash-flows.
9.1.2. Insurance risk
Under IFRS 4, policies must be classified as either insurance
policies or investment policies.
IFRS 4 specifies that a policy is classified as an insurance
policy if it exposes the insurance company to an insurance
risk, which corresponds to a non-financial risk taken on by
the insurer.
9.2. Brokerage
9.2.1. Nature of associated risks
The Group’s brokerage companies are exposed to the
financial risks presented in Section 9.1.
9.2.2. Management of brokerage risks
Through its financial model, where cash-flow generates
a negative working capital requirement, the brokerage
business enables the Group to achieve a very low level of
debt, reducing the volume of financial liabilities exposed.
The cash-flow generated by the Group’s brokerage companies
is fully invested in short-term financial investments, primarily
through the APRIL Trésorerie mutual fund. The APRIL
Trésorerie mutual fund represents a fund of funds, equivalent
to a cash-based UCITS (“monetary equivalent”), and therefore
involves zero capital risk and very low volatility.
9.2.3. Analysis of sensitivity
The income generated by cash-flow from the Group’s
brokerage companies is therefore sensitive to changes in the
benchmark monetary rate: EONIA. For reference, a 100 basis
point change in the EONIA on average over 2007 would have
had an impact on the Group’s financial result representing
1,105 thousand euros.
9.3. Insurance companies
9.3.1. Nature of associated risks
Companies are exposed to financial risks in terms of both
the financial assets that they hold and the financial liabilities,
including investment policies, that they take out.
They are exposed to the insurance risk through the portfolios
of insurance policies that they hold.
The Group is present on the health, personal protection and
property and casualty insurance sectors through a portfolio
of insurance policies, the main characteristics of which are
as follows:
Short risk, for a low unit amount, with high frequency,
High level of expertise,
Internalized management strategy.
Underwriting provisions relating to insurance policies are
valued in line with the methods traditionally used and in
accordance with the French Insurance Code based on various
statistical and actuarial processes.
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