Life insurance: is the stability of the remuneration of euro funds ephemeral? – July 2022 – News – Life insurance

For the second time in ten years, the return on funds in euros has not fallen in 2021. As for 2020, the average return reached 1.28%. However, this stability could only be a short-lived respite.

In the current economic context, concern is mounting among households. They fear seeing their purchasing power strongly impacted and this pushes them to save. However, despite a revaluation of the rates of regulated savings accounts on August 1, inflation, which will be close to 7% in September, makes these investments less and less profitable. This is also the case for euro life insurance funds.

According to a report published on July 13 by the Banque de France, in 2021 the average return on funds in euros – guaranteed supports for life insurance contracts – reached 1.28%. This rate is identical to that of 2020 and makes it possible to break for the second time, with the drop it has been experiencing until then.

A pseudo-stability that remains uncertain

According to the Prudential Supervisory and Resolution Authority (ACPR), this stability is linked in particular the rise in the Livret A rate. Fixed at 0.5% since February 1, 2020, the latter fell to 1% on February 1, 2022, which prompted insurers to react to limit the downward trend in the remuneration of euro funds. The ACPR recalls in a recent report that their average return was still 2.91% in 2012.

According to the banking and insurance policeman, the “medium-term projections of rates of return are subject to increased uncertainty and require analyzing different scenarios”. Could the announced revaluation of the passbook A rate from 1 to 2% on August 1 encourage insurers to also raise the remuneration of euro funds? Nothing is less sure.

But if they decide to go in this direction, they can rely on their reserves to improve yields. Indeed, still according to the ACPR, the provision for profit-sharing (PPB), i.e. the share of profits set aside by the insurer and which it does not immediately pay back to its customers, rises on average to 5.4 % of life insurance reserves in 2021. Compared to 5.1% in 2020.

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