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some companies have accumulated a veritable “tax” which must be returned to the savers

It is a true treasure accumulated over many years that insurance companies are frantically watching. By the end of 2021, return reserves reached a total of 63 billion euros for life insurance and capitalization contracts focusing on savings and individual pensions (i.e. two-thirds of the life insurance market), according to the Prudential Supervisory and Resolution Authority (ACPR). ), the supervisory body for banking and insurance. This corresponds to 5.4% of the total outstanding amount for these contracts.

These amounts come from the funds’ financial profits in euros. Every year, life insurance companies close their books and make money. The latter are essentially fed by the interest received on their bonds, which they have in their portfolios. They can also be due to realized capital gains on shares and property assets. The insurance companies must pay at least 85% of this profit to their policyholders.

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But they can distribute them directly or provide funds for profit sharing (PPB), the technical term for these famous reserves. But this tax actually belongs to the policyholders and the insurance companies have an obligation to return them within a maximum period of eight years.

Smooth speed changes

But in recent years, the redistributed provisions have been lower than the set aside, which has mechanically inflated the reserves. Ten years earlier, at the end of 2011, the latter weighed only 1.4% of the outstanding, according to ACPR.

Why have insurance companies played on the ants rather than the cicadas? Several motives may have prevailed. Start with caution. This money makes it possible to smooth out rate changes, both downward and upward. “We have banked very significantly for ten to fifteen years, precisely to be able to adapt to a configuration of rising interest rates like the one we are experiencing at the moment”points out Philippe Perret, CEO of Societe Generale Assurances.

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The reserves have also been used by some companies to artificially lower the return on euro funds earned for savers, despite good results. Why ? It was a way to encourage policyholders to diversify their savings towards supposedly more profitable investments. Finally, there are technical reasons. Since the end of 2019, insurance companies have been able to include part of their reserves in the calculation of their solvency ratio, which has eased them in a very demanding context for their capital.

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