insurers increase the income of their funds in euros

After a decade of steady decline, the return on euro life insurance funds will experience a very significant increase in 2022 thanks to rising rates, unprecedented inflation and the savings account rate. On August 1, it doubled to 2% and should exceed this indicator. 3% next February.

The AFER association, which has 753,000 members and generally sets the tone for the market, announced the 2022 rate for the euro fund at 2.01%, an increase of 30 basis points compared to 2021. The appearance of the announcements made by the competition, with an increase of around 50-60 basis points on average. Admittedly, those who often want to focus on their euro funds communicate first, but not the market leaders.

2% stage

The only major operator currently in contact (and again with average rates) is the bancassurance company Sogecap, a subsidiary of Société Générale. “Average profitability to customers increased by 81 basis points compared to 2021 and amounted to 2.17%”. Another significant increase in banking: Milleis (formerly Barclays) doubled its net income on the contract from 0.95% to 2.15%. This may reflect a more general move among bancassurers, who have traditionally held back returns on euro-denominated funds, and will dip into their no-doubt reserves (reserve for profit sharing, PPB) to capture the market and avoid risk. risk of strong currents.

Among mutual calculations, we see this effort to raise its rate above 2%, as with GMF or MAAF (2.05%, i.e. +55 basis points) or MAIF, which increased its net income by 2.1% by 80 basis points. MASCF mutual has a net rate of 2.5% in 2022, a clear contrast to 2.1% a year ago.

“Insurers have finally become aware of the risk of withdrawal of funds from the euro fund” says consultant Cyril Chartier-Kastler, founder of Facts & Figures. “Although interest rate growth is sustainable, so is inflation”. For this insurance specialist, the average rate of funds in euros should stabilize around 1.8-1.9% in 2022, against 1.08% in 2021 (1.3% according to the Bank of France) for a sample of individual contracts.

So far, France Assureurs has not yet seen any acceleration in the outflow of funds in euros (only 1.374 billion euros in capitalization at the end of November), although it is about 2 billion euros per month (2 billion in September, 2.6 billion in October). , except for the month of November, when outflows were limited to 300 million euros.

Dip into stocks

In this context, most insurers have decided to dig into the profit-sharing reserves (PPB) of euro funds to improve returns, and they say so openly. So MACIF explains that it makes sense “To return a portion of this stock belonging to the members”While rates are rising too fast, too fast, to allow insurers to rebuild their bond portfolios.

However, not all insurers have created the same reserves. While bancassurers are known to have relaxed PPBs, other insurers have narrower latitude. This is especially true of AFER, which can no longer provide the highest rate on the market. Its president, Gerard Beckerman, readily admits this: “we left a little late (in PPB, editor’s note), we have to make up for lost ground”he said during the presentation of the class of 2022.

Even as markets experience an unprecedented bond crunch in 2022, they face fine-tuning of euro funds that have invested massively in bonds, even as insurers have slowed down collections in this environment for years to favor unit-linked supports (which are not guaranteed). capital) from their customers. As a result, the renewal of the euro-denominated asset portfolio will proceed very slowly (due to the lack of new inflows) with the risk of realizing capital losses to deal with redemptions (withdrawals).

Smooth control

This is the result of the desire of insurers to increase the exchange rate of the fund in euros, and even some, for example, BNP Paribas Cardiff, to remove certain restrictions on the accumulation of the fund in euros. Especially since a new element can disrupt household arbitrages in terms of savings: savings book A grade. The latter is already at 2% from August 1 and should be increased to 3% next February 1.

Admittedly, insurers like Gerard Beckerman have repeated this over and over again: “Life insurance does not consider Livret A a competitor”. But the numbers are stubborn, and models show that BPCE’s head of research, Alain Tourdjman, points out that “strong correlation between livret A and fund in euro”. Especially when the Livret A rate approaches the psychological threshold of 3-3.5%, this creates greater sensitivity to the ratio among savers. The match has just started.