The insurance companies have accumulated a real nest egg with the surplus of their funds in euros. It is estimated at more than 70 billion euros by the firm Good Value for Money by the end of 2021. A reserve that could well be used to increase the 2022 rates for funds in euros.
71.4 billion euros: this is the amount of the provision for profit sharing (PPB) life insurance by the end of 2021, according to the latest figures from Good Value for Money. The average return on the reserve goes 4.87% by the end of 2021an increase of 37 cents (4.5% in 2020).
At the end of July, the Prudential Control and Resolution Authority (ACPR) estimated in its report that the performance reserves reached a total of 63 billion euros for life insurance and capitalization contracts. This corresponds to 5.4% of the total outstanding amount for these contracts.
Life insurance: These billions of euros are put in reserve
Each year, this PPB is replenished by interest received on the bonds in the funds in euros or by profits from shares and real estate assets. This reserve cannot be kept indefinitely by the insurance company, which has the obligation to repay at least 85% of this profit to savers within a maximum period of eight years.
For several years, the returns of life insurance funds in euros have been falling. The rates paid on euro support will average 1.28% in 2021. At the same time, insurance companies are putting money aside every year.
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PPB is a reserve of money driven by the funds’ results in euros which are not immediately distributed to policyholders. She allows that smooth out the returns of these funds from one year to the nextwhich prevents savers from suffering from the fall in government and corporate bond yields, which the Eurofunds mainly consist of.
Only 5 insurance companies concentrate 65% of the provision for profit sharing in the sectorwhich represents a yield reserve of 6.37% regarding them at the end of 2021.
- CNP Assurances (La Banque Postale): 14.97 billion euros PPB by the end of 2021, i.e. a level of PPB in reserve at 6.10%.
- Prdica (Credit Agricole / LCL): 13.11 billion euros by the end of 2021, i.e. a level of PPB subject 5.94%.
- ACM Vie SA and SAM (Crdit Mutuel Alliance Fdrale): 6.23 billion euros by the end of 2021, i.e. a level of PPB subject 7.34%.
- Cardiff Life (BNP Paribas): 6.34 billion euros by the end of 2021, i.e. a level of PPB subject 6.13%.
- Sogcap (Societe Generale): 5.14 billion euros by the end of 2021, i.e. a level of PPB subject 7.92%.
This year, the insurance companies could well take back part of these funds in order to increase the return on euro funds and not add to their reserves. A method that would enable the year 2022 to achieve a gross yield of between 1.80% and 2%.
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