Life insurance: with €23.6 billion collected since January 2021, unit-linked contributions reached an all-time high over the first five months of the year
In May 2021, net life insurance inflows came in at +€1.2 billion. For the 5th consecutive month, they exceeded the billion euro threshold, thus confirming renewed momentum. The enthusiasm for retirement savings plans (RSPs) among the French and the growing share of unit-linked investments are also signs of a quickly changing market.
Life insurance indicators are in the green...
In May 2021, net life insurance inflows were positive at €1.2 billion. This is the fifth consecutive month in which they have exceeded the EUR 1 billion mark. Cumulative net inflows between January and May 2021 amounted to €7.6 billion.
The month of May 2021 saw double the amount of contributions than the same month a year before: €11.4 billion in May 2021 compared to €5.7 billion in May 2020. This strong increase is in particular due to the retail network slowdown last spring induced by the lockdown. It brings the level of contributions back to May 2019 (€11.6 billion).
The amount of benefits paid out in May 2021 (€10.1 billion) was also greater year-on-year (vs €8.0 billion in May 2020) and close to May 2019 figures (€9.9 billion).
At the end of May 2021, outstanding life insurance contracts amounted to €1,827 billion showing +4.6% growth year-on-year.
... and confirm the trend towards more diversified savings...
May data confirmed the structural transformation of the life insurance market. This transformation is characterised firstly by a product mix tending towards a new balance between euro and unit-linked products. This trend indicates the commitment of the French to diversify their savings, as well as their ability to take on more risk to enhance their investment returns over the long term.
The appetite of the French for unit-linked funds is therefore confirmed with net inflows of +€2.8 billion in May 2021. In the first five months of the year, unit-linked contributions amounted to €23.6 billion, an all-time high. Moreover, cumulative net inflows in unit-linked products amounted to +€13.7 billion, a level not seen in fifteen years.
The share of unit-linked contributions in total contributions continued to grow. It reached 40% in May 2021 (37% on average since Jan 2021 vs 34% in 2020).
This increasingly favourable product mix for unit-linked funds is also a positive factor for the productive economy, as 83% of unit-linked funds are invested in corporate assets (58% in equities, 17% in bonds and 8% in real estate).
êThe structural transformation of the life insurance market is also characterised by the accelerated development of the RSP market. This trend indicates the willingness of the French to save more in the long term, mainly to prepare for their retirement.
In May 2021, the RSP market grew strongly with 117,000 additional policyholders (of which 84,000 are new policyholders and 33,000 from transferred contracts). Since the beginning of the year, 582,000 new policyholders have become holders of an RSP.
Just over EUR 1 billion were paid into RSPs in May 2021, including EUR 380 million in contributions and EUR 640 million in transfers from other pension insurance contracts. Compared to May 2020, contributions have increased by more than four times. Cumulative inflows from January to May 2021 amount to almost €7 billion, of which c.€1.9 billion in contributions.
In May 2021, net inflows to RSPs will thus represent almost one third of those to life insurance. Traditionally, payments into retirement savings products are concentrated within the second half of the year. As a result, these already very high figures attest to a boost in retirement savings in France.
At the end of May, RSPs had 1.7 million policyholders. The AUM stoodd at c.€20 billion, and 50% of inflows went to unit-linked.
For Franck Le Vallois, Managing Director of the French Insurance Federation: “With 40% of contributions in units of account and almost one third of net inflows in RSPs, May confirms the structural transformation of life insurance. The French are opting for increasingly diversified savings, for a higher expected return in the long run, and are thus preparing their future. This development in life insurance fully contributes to financing companies and the productive economy.”