Life insurance funds in euros served an average rate very slightly below 2% in 2022. What will happen for this year? According to several experts, the yield could well reach 2.5%, or even 3% in 2023.
The year 2022 was marked by an increase in life insurance returns after several years of decline. Funds in euros, guaranteed capital investments, have effectively offered an average performance of 1.90% against 1.30% the previous year.
Despite these better returns, outflows from euro funds continued: -€1.6 billion in May. In other words, savers take out more money than they put in.
The successive increases in the passbook A rate, which rose from 0.5% in January 2022 to 3% on February 1, 2023, do not push savers to turn to the medium and long-term investment that is life insurance. . More than ever, in a context of high inflation, they favor their precautionary savings.
Regulated savings competition
It should be remembered that with a current rate of 6% for the People’s Savings Account (LEP) and 3% for the Livret A and the Livret de Développement Durable et Solidaire (LDDS), competition is fierce for life insurance. Can the French hope that the euro life insurance funds will follow and reach 3%, the same rate as the Livret A whose remuneration is blocked until January 2025?
Livret A blocked at 3%: with 1000euros, how much interest will you earn in 1, 5 or 10 years?
There will be a continuation of the rise in rates in 2023 and the first indications show that we will approach the 2.5% 2.8% returnbelieves Philippe Crevel, director of the Cercle de L’pargne.
Insurers will dip into their reserves
An opinion shared by Gildas Robert, Senior partner Actuarial & Financial Services at Optimind, who adds that some contracts could even offer a performance of 3%. Insurers with a large profit-sharing reserve (PPB) that served the best rates in 2022, around 2.5%, will probably push up to 3%.
Insurers with a good level of PPB can maintain this rate, or even a little higher, over several years
Indeed, to serve such a yield, there is no miracle solution. Insurers will again have to dig into their reserve, the famous PPB. It would be nonsense to provide their PPB in 2023 in a context of rising rates and competition from the Livret A, according to Gildas Robert.
This pocket, fed by the performance of the funds in euros, is not immediately distributed to the policyholders and in particular makes it possible to smooth the returns from one year to the next. The average PPB reaches 5.4% of life insurance provisions in 2022a stable figure compared to 2021, according to the ACPR.
Why life insurance jeopardizes the new rise in the rate of the booklet A on August 1
There are several parameters that guide the definition of the rate paid on funds in euros. In the coming years, the level of PPB and the recovery strategy will be determining factors. Insurers have, on average, significant reserves. Insurers have no interest in starting over all at once because the context will most likely continue. We are planning a 2023 average rate of around 2.5%knowing that our models show that insurers with a good level of PPB can maintain this rate, or even a little beyond, over several yearsfurther believes Gildas Robert.
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