The reserves of professionals offering life insurance in euro funds will be called up; Illustrative photo. (Nattanan23 / Pixabay)
Insurers have been challenged by the sudden rise in rates due to a latency in the increase in the remuneration of euro funds. To cope with competition from Livret A and bonds, they will therefore have to draw on their own reserves. Some savers should be preferred.
Insurers have long been penalized by the collapse in the yield of the euro life insurance fund caused by very low bond rates. In recent months, however, they have been further challenged by the sharp rise in interest rates. Savers will still recover part of their return in 2022 thanks to the reserves accumulated by insurers, he explains Capital .
Insurers have remained at the old rates
First, the current difficulties of insurers are linked to a latency in the increase in the remuneration of euro funds, which in turn prevents them from re-evaluating the returns offered to savers. The euro funds are in fact blocked with the bonds previously subscribed. Thus, while rates remained around 1% for “classic” life insurance contracts, the net yield on Livret A accounts rose to 2% from 1 uh August.
For their part, savers can also immediately benefit from the new bond yields “Subscribing to funds with maturing bonds that grow more and more”, explained Cyrille Chartier-Kastler, founder of independent insurance prescriber Good Value for Money. The 10-year Treasury Equivalent Bond (OAT) rate, for example, was higher than 2.15% at the beginning of September.
Draw from reserves
Faced with this increasingly fierce competition, insurers will therefore have to revise their rates upwards. For this, them “The fund for profit sharing (PDB) set up will be used”, pointed to Cyrille Chartier-Kastler. This PDB represents a part of the fund’s return in euros set aside each year for security. This reserve must be returned to savers within eight years of the provision.
As of 31 December 2021, the PDB represented € 70.6 billion, or 5.05% of the total outstanding amount of the euro funds. This war chest could therefore make it possible to revalue the fund’s return in euros by up to 0.70%, which would bring rates back to around 2%. However, according to the expert, it will mainly be the most profitable savers who will benefit from this repayment of the PDB, in order to allow insurers to maximize their 2022 funding so that they can underwrite new bonds in the coming years.