2007 - April

2.0
Notes to the consolidated financial statements at December 31 st 2007
The figures for financial instruments exposed to a cash-flow
risk correspond to the impact that a change in rates would
have on the annual total for provisional coupons received on
variable-rate bonds held in the portfolio.
9.3.5. Insurance risk management process
The Group’s risk policy, the main aspects of which are defined
on a centralized basis within commitment committees, is
based around the following:
Definition of a general underwriting policy;
Definition of exposure limits and their use;
Definition of a reinsurance policy;
Monitoring of various underwriting results;
Definition of risk assessment methods;
Identification and monitoring of risks placed.
The main elements likely to influence changes in the loss
ratio for insurance companies are as follows:
Property and casualty insurance
Auto branch: a normal series of major claims (serious
accidents with bodily injuries);
Retail and corporate comprehensive branches: an abnormal
series of major claims on various premises or sites (fire, gas
explosion, etc.) or a natural disaster (storm, earthquake,
etc.).
Health and personal protection:
Death in connection with a policy concerning a major
amount of capital;
Multiple deaths in connection with group policies (terrorist
attack, aircraft accident, etc.);
Epidemic involving many days of sick leave;
Pandemic with risk of multiple deaths.
Life and savings
Death in connection with a policy concerning a major
amount of capital, combined with a lasting downfall of
financial markets.
These risks are reduced on two levels:
Upstream, through the underwriting policy (highly selective
choice of risks, restrictions on concentrations, capping of
retention thresholds, application of high unit deductibles);
Downstream, through the reinsurance policy (cession of
share in risks, capping of larger claims, limitation of the
number of occurrences per event).
9.3.6. Bonus/malus monitoring
A review of underwriting provisions over the last few years
makes it possible to see the recurrent generation of bonus
premiums.
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