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Life insurance: net inflows in unit-linked products reached almost +€11 billion in the first four months of the year, a record level in over 14 years

April 2021 confirmed the momentum observed in life insurance for several months, with EUR 1.6 billion in net inflows. Net unit-linked inflows reached +€2.9 billion in April and €10.8 billion since the beginning of the year, levels not seen since 2007.

Life insurance continues to gain momentum…

Net life insurance inflows were positive for the month of April 2021, at +€1.6 billion, and reached EUR 6.4 billion for the first four months of the year.

The premiums in April 2021 amounted to EUR 13.1 billion. They more than doubled compared to the same month in 2020 (EUR 6.5 billion), due to the near shutdown of the retail networks during the first lockdown and a form of wait-and-see attitude from private investors. On a more comparable basis, premiums increased by 2% between April 2019 and April 2021.

In addition, the benefits paid out in April 2021 (€11.5 billion) were also greater than those paid out in April 2020 (€8.7 billion).

At the end of April 2021, outstanding life insurance contracts amounted to €1,818 billion showing +4.5% growth year-on-year.

 

... to benefit corporate financing, namely through the good performance of unit-linked products...

Net unit-linked inflows in April 2021 amounted to +€2.9 billion and to +€10.8 billion on an aggregate basis over the first four months of 2021. These are levels of net inflows that have not been seen for over 10 years.

Source: FFA
Note for the reader: in the first four months of 2021, net inflows amounted to €10.8bn for unit-linked life insurance products.

The share of unit-linked products in contributions stood at 37% in April, a stable level on a year-to-date basis (34% in 2020) and confirms a product mix that is more and more favourable to unit-linked products.

This momentum in unit-linked products confirms the growing appetite of the French to diversify their savings to improve their long-term return expectations. Since the beginning of the year, the performance of the units of account stands at 4.3%. This momentum also provides significant support for the financing of the economy and to the recovery, as 83% of unit-linked products are invested in corporate assets (55% in shares, 20% in bonds and 8% in real estate).

In addition, life insurers’ investments in “Relance”-labelled funds reached EUR 4.5 billion at the end of March 2021, of which EUR 3 billion in unit-linked products. Almost all life insurers now market “Relance”-labelled funds. Life insurance also supports private equity, to the tune of EUR 21.4 billion.

 

... and the success of Retirement Savings Plans

The Retirement Savings Plan (RSP) market continued to grow in April 2021, with 74,000 additional policyholders (including 52,000 new policyholders and 22,000 from transfers) and just over €1 billion paid out, almost half of which was in new policies (€448 million and €587 million from transfers). The new RSPs being taken out show particularly strong growth compared to April 2020: +335% for new policyholders and +382% for contributions. At the end of April, RSPs had 1.6 million policyholders and EUR 19 billion in outstanding notional. The share of unit-linked funds amounts to 50% of the payments.

At the same time, the development of Supplementary Occupational Retirement Funds[1] (SORFs), a mechanism specific to retirement activities, is continuing. It allows insurers to invest more in assets that promote the productive economy because of the long-term nature of these savings. At the end of 2020 outstanding SORFs amounted to EUR 31 billion.

 

For Franck Le Vallois, Managing Director of the French Insurance Federation: “The favourable outcome of the health situation is leading to a change in the behaviour of investors and speeding up a return to normal for the retail networks, thus contributing to the momentum in life insurance, in particular to that of the unit-linked products that are so popular with the French in their search for diversification and additional returns over the long term. The success of retirement savings plans also confirms their desire to prepare for their future. In the current context of a recovering economy, this reorientation of French people’s savings towards life insurance as a whole is very good news because it benefits the financing of all companies.”

 

[1] Fonds de retraite professionnelle supplémentaire or FRPS