With 1,923 billion euros of savings housed in life insurance contracts at the end of 2023, this envelope is a real juggernaut in the French heritage landscape. A weight largely due to the qualities of the euro fund, which collects 71% of these sums. Its capital guarantee, liquidity and yield have made it an essential investment in most homes. A position that has been partially called into question in recent years due to plummeting remuneration and the implementation of numerous investment constraints.
But insurers’ communication on 2023 returns confirms what was anticipated last year: this era is now behind us. “The multi-support contract, which combines the euro fund with guaranteed capital and units of account, is a very interesting product from the client’s point of view because it combines the ability to take risk in a very diversified way and security, thanks to the funds in euros which remain the basis of life insurance”, estimates Philippe Perret, general manager of Société Générale Assurances.
2023, a prosperous year on the financial markets
While interest rates have risen and the bonds which make up the bulk of this asset display more attractive remuneration, companies have removed the barriers to entry into this guaranteed support. “Currently, it is possible to make 100% funds in euros on our various contracts,” assures Yves Conan, general manager of the broker Linxea, which lists four insurers.
Better, to attract savers, the latter have significantly increased the yield served in 2023. Initially expected around 2.5% by Good Value for Money, the average market rate could ultimately consolidate a notch above. The managers of these funds benefited from a prosperous year on the financial markets where both bonds and stocks performed well. However, most companies have also drawn on their reserves – provisions for profit sharing – in order to fund the remuneration paid to their clients. “We have been forward-looking for several years with a view to coping with the rise in interest rates and the time has come to use these reserves which belong to policyholders,” underlines Odile Ezerzer, director of Macif Finance Epargne. We are calm to do so to the extent that the performance of our investments improves in parallel.”
The rise of bonuses
In this game, not all players have the same cards in their hands. According to the Prudential Control and Resolution Authority (ACPR), insurers had 5.4% in reserves at the end of 2022. But these are unevenly distributed: five entities concentrate two thirds of these sums, mainly bancassurances. Unsurprisingly, the latter have therefore moved up significantly in the ranking of the best rates. “We are able to redistribute part of our financial reserves to offer a euro fund competitive with the returns on regulated savings, other savings accounts, term accounts and government bonds,” underlines Philippe Perret, at Société Générale. Competition which makes the 3% level appear to be a benchmark to be achieved.
This redistribution is also encouraged by the ACPR: “The Authority will study changes in the remuneration paid for 2023, and in particular the progressive redistribution of the provision for profit sharing established in recent years in order to maintain attractive remuneration for savers”, indicates the regulator in its roadmap for 2024.
The season is also marked by an amplification of bonus policies. More and more companies modulate the return provided according to different criteria: mainly the part of the contract allocated to units of account but also, sometimes, the level of outstandings. Appearing around ten years ago, bonuses have gradually spread to become the norm. Few establishments refuse to do so: mainly mutual societies with a clientele that is rather risk averse. At Macif, only the property contract uses it but the subject remains under study for the general public contract. “Our members look at the competition and it is true that overpaying those who accept risk can trigger investment, so we are not closing the door,” believes Odile Ezerzer. “This must, however, remain simple, understandable and consistent for our members.”
In competition with passbooks and term accounts
However, for certain actors, bonuses become a significant part of the overall remuneration. For example, the rate range on the Helios Sélection du Conservateur contract ranges from 1.1% to 4.2%. The allocation rules are sometimes abstruse, especially when these bonuses can be combined with one-off promotional offers on payments. For example, Suravenir is currently offering a 2% rate supplement on Suravenir Opportunities 2 for all payments made in 2024. “Be careful to carefully study the conditions of these offers,” warns Yves Conan. Bonuses can sometimes be lost if you withdraws its capital during the year, with a risk of enormous disappointment among savers.” Get out your calculators!
Will these efforts be enough to bring savers back? In 2023, net withdrawal payments were limited to 2.4 billion euros, compared to 20 billion in good years, such as 2018 or 2019. Many policyholders withdrew money from their life insurance, to cope particularly inflation. “In real estate, the rise in rates and the tighter conditions for access to credit have also encouraged the French to resort less to borrowing and to mobilize their savings more to have a more substantial personal contribution”, analyzes Franck Le Vallois, general director of France Assureurs.
This year, the context remains unfavorable but it could improve over the months. “If interest rates fall as experts predict, the remuneration of savings books and term accounts will decline accordingly, which will make the euro fund more competitive,” predicts Yves Conan. In recent years, however, savers have decided – through compulsion or to improve the performance of their savings – to expose themselves more to risk. The share of payments allocated to units of account thus reached 41% last year, with policyholders benefiting from attractive and low-risk units of account – dated bond funds, money market mutual funds, structured products with guaranteed capital at maturity, etc. – to diversify their contract, while obtaining bonuses on the euro fund. A paid combination.
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