Life insurance still attracts despite a drop in the value of certain investments

Life insurance in France continued to attract billions of euros in savings in the first half, but saw its outstandings eroded by the fall in value of certain riskier investments, and could now suffer from more marked competition from the Livret A. This savings product “records an excellent first half of the year“, greeted during a conference call Franck Le Vallois, the general manager of France Assureurs.

With 76.4 billion euros in contributions, or deposits – the highest level since 2010 – and 64.3 billion euros in payments (withdrawals), the flow of life insurance savings is positive in the first half , according to figures shared on Wednesday by this professional federation. Net inflows reached 12.1 billion euros, up 1.8 billion euros compared to the same period last year. But it does not compensate for the fall in the valuation of certain investments in life insurance: certain units of account (UC), riskier but potentially more profitable, have been mistreated since January 1, in particular because of the poor shape of the markets.

Life insurance outstandings at the end of June reached 1.821 billion euros, i.e. 55 billion euros less than at the end of December 2021. Despite this, unit-linked units still attract savers as much: their net inflows are positive ( +20.9 billion euros) unlike that of euro funds (-8.8 billion euros), which are less profitable but whose capital is guaranteed. There are several reasons for this, explains to AFP the co-founder of Cashbee, a savings application, Cyril Garbois: the work of insurers and distributors to better explain these investments to their customers, a “regular savings mechanism» independent of market performance or access via UC to new asset classes such as commodities or private equity.

Tight match against Livret A

The month of June also reflects this trend “not new“to the advantage of the UC, underlined Franck Le Vallois, vector according to him of”a search for better diversificationamong savers. Diversification which has also been to the advantage of Livret A since the beginning of the year: the net inflow of this regulated product (+16.5 billion euros) is higher over the period than that of life insurance for yet five times less outstanding (359.8 billion euros).

The momentum should continue with the Passbook A rate going to 2% on August 1, which is more than the number of euro funds. “The deterioration of the economic context has led households to favor precautionary savings and in particular the Livret A whose rate has been and will be reassessed again», Considers Philippe Crevel, director of the Cercle de l’Epargne. The Managing Director of France Assureurs defended the specificities of life insurance, highlighting the possibility of taking out several contracts, the absence of ceilings and management capable of meeting personalized needs according to the savers’ appetite for risk and their savings horizon.

Inertia of euro funds

The euro funds, partly composed of sovereign bonds acquired from year to year, are guaranteed but the evolution of their rate is slow. If the rise in interest rates is rather good news for savers, it will only come into full play when new, more profitable investments have replaced the oldest ones. “We will now have new opportunities“, Welcomes the president of the French Association of savings and retirement (Afer) Gérard Bekerman, interviewed by AFP.

But it will taketimeso that new acquisitions can significantly increase the performance of euro funds, he adds, comparing the portfolio to a heavy liner to maneuver. In the meantime, it will be tempting to dip into the reserves, also called the profit-sharing reserve (PPB), a “significant leverage” who “brings solidity and allows (…) insurers to adapt the rate paid according to the context“, reminded Franck Le Vallois. “I’m in favorresponds Mr. Bekerman. “It’s time to consume it, but moderately in order to conserve ammunition for the next few years“.

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