Life insurance reached an exceptional level for a month of July, with €4.9 billion in contributions and €2.7 billion in net unit-linked inflows
July 2021 confirmed the momentum observed for several months in life insurance, with net inflows of +€1.1 billion and +€2.7 billion in unit-linked products.
Unit-linked business reached new record levels for July, with contributions of €4.9 billion over the month and cumulative net inflows since the beginning of the year of €22 billion.
Life insurance momentum continues...
Life insurance net inflows for the month of July 2021 were positive at +€1.1 billion, up €1.4 billion compared to July 2020, and exceeding the €1-billion threshold for the seventh month in a row. They stood at +€12.0 billion in cumulative terms since the beginning of the year, up by €16. 0 billion compared to the same period in 2020.
Contributions in July 2021 amounted to €12.7 billion, up from the same month in 2020 (+€2.3 billion). Since the beginning of the year, they stand at €89.8 billion, up by €25.1 billion and €2.5 billion compared to the same period in 2020 and 2019 respectively.
In addition, The amount of benefits paid out in July 2021 (€11.6 billion) was slightly greater year-on-year (+€0.9 billion) and July 2019 figures (+€0.4 billion).
At the end of April 2021, outstanding life insurance contracts amounted to €1,848 billion displaying +5% growth year-on-year.
...marked by a significant number of transfers to newer life insurance policies
In Q1 2021, 250,000 life insurance policies were transferred under the PACTE Act , which authorises the transfer of a life insurance policy to another policy with the same insurer, in accordance with the terms and conditions defined by the insurer, while allowing the policyholder to retain the tax-exempt status of their policy. The total amount transferred amounted to €7.4 billion, which already exceeds the full-year 2020 figures (236,000 contracts transformed for €6.8 billion).
These transfers will be facilitated by the commitment made by the insurers of the French Insurance Federation in June 2021 to allow their policyholders to benefit fully from this option made possible by the PACTE Act. FFA insurers have therefore undertaken to go beyond the provisions of the PACTE Act by adopting a mechanism for the automatic and simplified transfer of life insurance policies, particularly when the same distributor is involved. This commitment will enable the insurers’ customers to benefit from the latest and most innovative life insurance products. The Profession’s increased use of this mechanism introduced by the PACTE Act illustrates the sector’s drive to constantly innovate in the area of life insurance.
Of the amounts transferred, €1.3 billion were reinvested in unit-linked products in the first half of 2021 (vs €1.4 billion for the full year 2020).
...driven by ever increasing unit-linked investment flows
At €4.9 billion, the amount of unit-linked premiums reached a new record for a month of July, far exceeding the previous high of €3.8 billion in July 2007. The share of unit-linked premiums in contributions was 39% month-on-month and 38% year-to-date (35% on average in 2020). Finally, net unit-linked inflows reached €2.7 billion in July 2021 (the highest figure since July 2007) and €22 billion year-to-date.
The growth in unit-linked products confirms the appetite of the French to diversify their savings to increase their return expectations. This momentum also provides significant support to the financing of the economy and to the recovery, as 83% unit-linked products are invested in corporate assets (57% in shares, 17% in bonds and 9% in real estate).
In addition, life insurers’ investments in “Relance”-labelled funds reached €5.4 billion as of 30 June 2021, of which €3.8 billion in unit-linked products. The “Relance”-labelled funds thus increased by 18% in the first half of 2021. The “Relance” label, launched by the French Ministry of the Economy, Finance and Recovery in October 2020, recognises investment funds capable of rapidly mobilising new resources to support the equity and quasi-equity of French companies.
Life insurance also supports private equity, to the tune of €23.3 billion. These investments have risen sharply since the beginning of the year: +14% compared to +1% for all life insurers’ investments.
... and the success of Retirement Savings Plans (RSPs)
In July 2021, the RSP market pursued its growth with 100,000 additional policyholders (including 60,000 new policyholders and 40,000 from transferred contracts). Payments into RSPs amounted to €844 million, of which €370 million were premiums and €474 million were transfers from other retirement savings policies.
Year-to-date, RSP contributions amounted to €2.7 billion and net inflows to +€2.2 billion (vs. €3.0 billion for the full year 2020).
As of 31 July 2021, circa of 2 million policyholders were insured by an RSP. The AUM now stand at c.€22 billion, with almost half in unit-linked products.
For Franck Le Vallois, Managing Director of the French Insurance Federation: “The momentum observed over the past few months in favour of unit-linked products and retirement savings plans has fuelled investments by life insurers in private equity and in “Relance”-labelled funds. Life insurance is a key player in a key period for the financing of the productive economy.”