When the disappointments of the State turn into good news for savers. From next January, insurers and mutuals will announce the rates paid on the euro fund part of their various contracts, for the year 2025. However, for life insurance holders, good news is looming: the remuneration of their savings could well increase compared to 2024.
After 2.6% distributed on average on the market last year, “we anticipate an average rate of around 2.65% in 2025, or even 2.7% in the most positive scenario”estimated Cyrille Chartier-Kastler, director of the Facts & Figures firm, during a press conference this Friday, October 17. This is a slightly increased forecast compared to the estimate made at the end of summer. In question, some not very encouraging news: “France’s political and budgetary situation is deteriorating, and it risks further increasing the yield on French bonds,” predicts Cyrille Chartier-Kastler.
Insurers fear competition from Livret A less than from other bond investments
As a reminder, almost three quarters of insurers’ guaranteed capital funds are made up of very low-risk bonds, mainly from governments and large companies. In this pocket, 10-year French government bonds hold a large place (19.4% in all euro funds on average in 2024). Thus, when the confidence of insurers in France’s ability to repay its debts decreases, they demand a higher return in return, and the rate of new bonds subscribed increases, which has repercussions on the return provided to savers.
However, the rate actually distributed does not correspond exactly to the performance of the insurers’ portfolio. It can also be “inflated” if the insurer draws on its reserves, in particular to face competition from the other major savings product with guaranteed capital, the Livret A. As the rate of the latter is falling (1.7% since August 1), we could have expected the return on euro funds to follow the same trajectory. In reality, “insurers are caught in the middle, between the fall in the Livret A rate and the rise in French bond yields, while still having to collect massively” analyzes Cyrille Chartier-Kastler.
In reality, by serving a better rate on average this year, insurers anticipate an explosion in sovereign bond yields in the coming months. This is to avoid competition no longer from Livret A, but from other investments which would also benefit from this increase in bond yields: term accounts, distributed by banks, but also securities accounts, which also allow direct investment in baskets of bonds, or even bonds.
